Paytm Share Price: Shares of One 97 Communications Limited, the parent entity of Vijay Shekhar Sharma-promoted Paytm, surged nearly 7 per cent to a high of Rs 542.90 in intra-day trades on Friday after the company announced its plans to consider share buyback.
According to a release issued by the company to the BSE, One 97 Communications has scheduled its board meet on December 13, Tuesday, to consider the share buyback proposal.
“Pursuant to Regulation 29 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“SEBI Listing Regulations”), we wish to inform you that a meeting of 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, in accordance with the applicable provision under the Companies Act, 2013 (including the rules and regulations framed thereunder), the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018 (as amended), and other applicable laws,” according to a disclosure from One 97.
“The management believes that given the Company’s prevailing liquidity/ financial position, a buyback may be beneficial for our shareholders. The outcome of the Board meeting will be disseminated to the stock exchanges after conclusion of the Board meeting on December 13, 2022, in accordance with the applicable provisions of the SEBI Listing Regulations,” the announcement added.
A few weeks earlier, the company’s stock came under pressure when investor Softbank launched a block deal to sell shares worth around $200 million post the end of the lock-in period for pre-IPO investors.
What is a Share Buyback?
In a share buyback or repurchase, a firm buys back its own shares from investors or shareholders usually at a price higher than the market price. It is considered an alternative, tax-efficient way to return money to shareholders.
Paytm Share Price History
At 09:30 AM, Patym traded 4.5 per cent higher at Rs 531.50 with trades of around 3.37 lakh shares on the BSE. In comparision, the S&P BSE Sensex was up 0.1 per cent at 62,615.
At the current market prices, Paytm trades at a massive 75 per cent discount to its IPO price of Rs 2,150 per share. Post the company’s Rs 18,300 crore IPO in November 2021, the stock has been on a downward spiral, and hit an all-time low of Rs 439.60 on November 23, 2022 on the BSE.
What Do Analysts Say?
In a recent interaction with analysts, One 97 Communications sounded optimistic on its growth prospects and reasserted its guidance on turning profitable at an operating level next year.
“Management stated that the journey to attain operating profitability (EBITDA before ESOP cost) via consistent margin improvement has exceeded its expectations in the past few quarters,” ICICI Securities, which attended the company’s analyst day meet, said in a note.
On November 28, foreign brokerage firm CLSA upgraded its outlook on the fintech major’s stock from “sell” to buy” and added that cash burn should end in “another 4-6 quarters.”
On the earnings front, One 97 Communications Q2 net loss widened to Rs 588.80 crore for the quarter ended Septmeber 2022 as against a loss of Rs 461.20 crore in the corresponding quarter a year ago. Total income, however, grew 36 per cent YoY to Rs 1,490.20 crore from Rs 1,095.60 crore.
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