Paytm approved buyback valued at Rs. 850 cr at Rs. 810 per share

Guwahati: Paytm's parent company, One97 Communications, approved a share repurchase programme on December 12 for a total of 850 crore rupees, priced at Rs 810 per share.

The company informed the stock exchanges that it would "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 had chosen the open market route through stock exchanges method, which would take a maximum of six months to complete.

Paytm estimated that 10,493,827 equity shares may be repurchased at the maximum buyback price and maximum buyback volume. As of March 2022, this equals around 1.62 percent of the company's paid-up share capital, it noted.

The regulatory filing stated that the overall expenditure "would be in excess of roughly Rs 1,048 crores" assuming a full repurchase of Rs 850 crore and associated buyback taxes.

Paytm said that the repurchase will use "at least 50% of the money specified as the maximum buyback size, i.e. Rs. 425 crore."

A committee designated to supervise and carry out the share repurchase plan has been established by the company's board of directors.

The board has decided that a repurchase of the company's shares would be accretive for its shareholders in light of Paytm's "momentum of financial performance, clear route to cash flow generation, and surplus cash as a result," according to the exchange filing.

The decision was made following a "detailed evaluation of forecasted investment requirements to promote long-term value creation," according to a statement from Paytm's board, which found that there is excess cash that may be "productively allocated to a repurchase of shares."

The business also stated that the share repurchase plan is "not being oriented toward" the revenues from its first public offering (IPO). Vijay Shekhar Sharma, the chief executive of Paytm, stated that he believes a buyback at this time will "be enormously advantageous for our stakeholders and will create long-term shareholder value."

"The business has clearly picked up steam during the past year, and we are ahead of schedule. We remain confident in our ability to produce robust revenues and cash flows to invest in sales, marketing, and technology as we consider the monetisation prospects in our core payment and credit business," Sharma continued.

Paytm announced consolidated income from operations for the three months ended in September 2022 of Rs 1,914 crore, an increase of 76.2 percent over the same period the previous fiscal. The top line had a 14% sequential growth.

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