One97 Communications, the parent entity of payments solutions firm Paytm, on December 12 approved a share buyback plan of Rs 850 crore, priced at Rs 810 per share.
"The company will undertake the buyback of up to Rs 850 crore (excluding buyback taxes and other transaction costs) at a maximum price of Rs 810 per share, and has opted for the open market route through stock exchanges method, which is to be completed within a maximum period of 6 months," it informed the stock exchanges.
At the maximum buyback price and the maximum buyback size, the indicative maximum number of equity shares bought back would be 10,493,827, Paytm said. This represents around 1.62 percent of the company's paid-up share capital as of March 2022, it added.
Assuming a full buyback of Rs 850 crore, and applicable buyback taxes, the total outlay "will be in excess of approximately Rs 1,048 crores", the regulatory filing noted.
Paytm added that it would utilise "at least 50 percent of the amount earmarked as the maximum buyback size i.e. Rs. 425 crore" for the buyback.
The company's board has constituted a buyback committee to oversee and implement the share buyback plan.
Witnessing Paytm’s "momentum of financial performance, clear path to cash flow generation and excess cash as a result", the board has determined that a buyback of the company's shares would be accretive for its shareholders, the exchange filing stated.
Paytm's board has determined that there is surplus liquidity that can be "productively applied to a buyback of shares", it said, adding that the decision was taken after a "detailed review of projected investment requirements to drive long-term value creation".
The company also clarified that proceeds from its initial public offering (IPO) are "not being directed towards the share repurchase plan".
Paytm chief executive officer Vijay Shekhar Sharma said he believes that a buyback at this stage will be "immensely beneficial for our stakeholders and will drive long-term shareholder value".
“Over the last year, there is clear business momentum, and we are ahead of our plans. Looking at the monetisation opportunities in our core payment and credit business, we feel confident to generate healthy revenues and cash flows to invest in sales, marketing and technology," Sharma added.
In the quarter ending September 2022, Paytm had reported a consolidated revenue from operations of Rs 1,914 crore, which marked a jump of 76.2 percent over the corresponding period of last fiscal. The sequential increase in top line was 14 percent.
The company, however, had posted a consolidated loss of Rs 571.5 crore during the second quarter, widening from a loss of Rs 473.5 crore in same period last year.
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