Due to the announcement of the buyback, Paytm’s price increases by 5%.
The cost and size of the payback have not yet been determined by the company. The buyback price is typically higher than market rates, providing departing stockholders with a profitable exit strategy.
One 97 Communications, the parent company of Paytm, announced that its board will explore a share buyback on December 13 and this news caused shares of the firm to soar more than 5% in morning session on December 9.
In a statement with the exchange, the firm stated, “We desire to tell you that a meeting of the Board of Directors of the Company is scheduled to hold on Tuesday to discuss a proposal for buyback of the fully paid-up equity shares of the Company.”
Paytm continued, “The management feels that a repurchase may be advantageous for our shareholders given the current liquidity and financial situation of the company.
The shares soared 5% to Rs 532.80 as of 9.30 am. After a year of being listed, the corporation has barely brought about its first buyback. Up until this point, no profits have been reported.
As of September 2022, Paytm had a net cash hoard of Rs 9,182 crore (cash equivalent and investable balance included), including roughly Rs 5,600 crore from IPO proceeds of Rs 8300 crore.
The cost and size of the payback have not yet been determined by the company. The buyback price is typically higher than market rates, providing departing stockholders with a profitable exit strategy.
The stock has a favourable rating from the majority of analysts. According to Bloomberg statistics, eight of the twelve analysts following the stock have a “buy” rating, while three have a “hold” rating. Only one expert thinks you ought to sell the stock short.
Some of them predict that the stock will double from where it is now. The stock has objectives from JP Morgan and Citi of Rs. 1,100 and Rs. 1,055, respectively. This is true even when the stock price is only a quarter of the IPO price.
The increased focus on making money by the management has persuaded many of them. Some, however, believe that it is hampered by historical issues and regulatory dangers that could undermine its plans.