Bloomberg | | Posted by Aryan Prakash
Paytm will purchase again as a lot as 8.5 billion rupees ($103 million) of its personal shares, following a roughly 75% plunge within the Indian fintech firm’s inventory worth since going public in 2021.
The board at Paytm, whose official title is One 97 Communications Ltd., on Tuesday authorized a plan to repurchase as many as 10.5 million shares at 810 rupees apiece on the open market, the corporate mentioned in an announcement Tuesday. That may be a 59% premium to Thursday’s closing worth, earlier than the corporate mentioned it was contemplating a buyback.
“Paytm board believes that this buyback is an indication of confidence that the corporate is on a transparent path to ship money circulate profitability, and this buyback won’t have any impression on its progress plans within the close to future or on its profitability plans,” Paytm, as soon as India’s most respected startup, mentioned in a submitting.
Paytm mentioned it’s forward of its plans to attain an working revenue earlier than worker inventory choices prices by the top of September 2023.
Whereas a buyback could assist bolster Paytm shares, which floated at 2,150 rupees at their preliminary public providing, some buyers fear about administration utilizing money to prop up the inventory worth relatively than to show round loss-making operations.
Headquartered on the outskirts of New Delhi, the corporate posted a wider second-quarter loss final month. It competes with Walmart Inc.’s PhonePe and Alphabet Inc.’s GPay within the crowded Indian fintech market.
Firms can’t use cash raised from an IPO to fund a share buyback, Paytm mentioned beforehand. Any buyback would use money on the corporate’s books, it mentioned forward of the announcement.
Backed by China’s Ant Group Co. and Japan’s SoftBank Group Corp., Paytm had a money steadiness of 91.8 billion rupees on the finish of September, in line with its earnings assertion final month.