Paytm announces share buyback at Rs 810 per share

One 97 Communications (Paytm) on Tuesday said it will undertake a buyback of up to Rs 850 crore at a maximum price of Rs 810 per share.

The board has decided to opt for the open market route through stock exchanges method, which is to be completed within a maximum period of 6 months.

The Paytm stock rose 2.16% to settle at Rs 539.50 on Tuesday. The maximum price of Rs 810 per share is a premium of 50.13% to the last closing price.

Assuming a full buyback of Rs 850 crore, and applicable buyback taxes, the total outlay will be in excess of approximately Rs 1,048 crore.

The company said that 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 Paytm board has determined that there is surplus liquidity that can be productively applied to a buyback of shares. This decision has been taken after a detailed review of projected investment requirements to drive long-term value creation.

"Paytm reiterates that proceeds from the IPO are not being directed towards the share repurchase plan, the company said in an exchange filing. It said all directors present voted unanimously in favour of the proposal, including all independent directors.

The company's directors and key management personnel will not sell any shares during the buyback period, it said.

Until completion of the buyback period, the company's directors and key management personnel Vijay Shekhar Sharma (founder & CEO) and Madhur Deora (executive director, president & group CFO) - will not be participating in any sale of shares.

The board resolved that the company shall not withdraw the buyback after the public announcement has been made.

According to the company, at the maximum buyback price and the maximum buyback size, the indicative maximum number of shares bought back would be 10,493,827 shares, which represent 1.62% of the paid-up share capital of the company as of 31 March 2022. "If the shares are bought back at a price below the maximum buyback price, the actual number of shares bought back could exceed the maximum buyback shares, but will always be subject to the maximum buyback size," it said.

The company will utilise at least 50% of the amount earmarked as the maximum buyback size Rs 425 crore for the buyback (minimum buyback size). Based on the minimum buyback size and maximum buyback price, the company would purchase a minimum of 5,246,913 shares. The board has constituted a buyback committee to oversee and implement the buyback.

Vijay Shekhar Sharma, founder & CEO - Paytm said, "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. We value our shareholders and their journey with us in the public markets. I believe that a buyback at this stage will be immensely beneficial for our stakeholders and will drive long-term shareholder value."

In October and November 2022, Paytm's operating performance has shown strong growth in its lending business with the annualised run rate for the loan distribution business is now Rs 39,000 crore ($4.8 billion). The company said it continued to maintain its leadership in offline payments with merchants paying subscriptions for payment devices exceeding 5.5 million.

The company said it is ahead of its previously-stated plans to achieve EBITDA before ESOP costs profitability by quarter ending September 2023.

Paytm is India's payment Super App offering consumers and merchants most comprehensive payment services. Pioneer of the mobile QR payments revolution in India, Paytm's mission is to bring half a billion Indians into the mainstream economy through technology-led financial services. Paytm enables commerce for small merchants and distributes various financial services offerings to its consumers and merchants in partnership with financial institutions.

On a consolidated basis, One 97 Communications' revenue surged 76.2% to Rs 1914 crore in Q2 September 2022 over Q2 September 2021. The revenue was driven by increase in merchant subscription revenues, growth in bill payments due to growing MTUs (monthly transacting users) and growth in disbursements of loans through platform. However, the company's consolidated loss widened to Rs 571.10 crore in Q1 June 2022 from net loss of Rs 472.90 crore a year ago.

The stock entered the bourses on 18 November 2021. It was listed at Rs 1955, a discount of 9.07% compared with the initial public offer (IPO) price of Rs 2150. The IPO of Paytm was subscribed 1.89 times. The issue opened for bidding on 8 November and it closed on 10 November. The price band of the IPO was fixed at Rs 2080 to Rs 2150 per share.

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