Paytm shares climb the most in a week on buyback proposal

“The board of directors of the company is scheduled to be held on Tuesday, December 13, 2022 to consider a proposal for buyback of the fully paid-up equity shares of the company,” Paytm said in an exchange filing. “The management believes that given the Company’s prevailing liquidity/ financial position, a buyback may be beneficial for our shareholders,” it added. If approved, this will be the fintech player’s first ever share buyback that will be announced since listing.

A share buyback, also known as share repurchase, is a corporate action to buy back its own outstanding shares from its existing shareholders usually at a premium to the prevailing market price. It can be an alternative tax-efficient way to return money to shareholders. Share buybacks reduce the number of shares in circulation, which can increase the share value and the earnings per share (EPS).

Last month, Paytm shares were under pressure after Japan’s SoftBank Group Corp offered to cut its stake in the company through a $200 million block deal. The sale followed the end of one-year mandatory lock-in for pre-IPO investors in Paytm.

Paytm shares made their stock market debut in November last year and the scrip has declined nearly 66% since its listing amid the global tech slowdown that started last year. Other new-age tech stocks, including Zomato, Nykaa, PB Fintech – which went public last year, have also had tough months so far on the stock market and have already fallen below their respective issue prices.

Paytm’s net loss in the July-September period swelled to ₹571 crore as compared to ₹473 crore a year earlier, however, narrowed from ₹650 crore in the previous quarter of June 2022. Meanwhile, its consolidated revenue from operations increased by about 76% to ₹1,914 crore during the reported quarter.