To support its plummeting stock price, the board of directors of digital financial services company One97 Communications (OCL), which owns the Paytm brand, announced an Rs 850 crore share buyback program through the open market on 13 December. On Tuesday, the BSE closing price for Paytm shares was Rs 538.40. The maximum amount for an open market buyback of equity shares through the Indian stock exchanges is Rs 850 crore, excluding buyback tax, at the stock price not exceeding Rs 810 per equity.According to Paytm, the maximum buyback size is less than 10 percent of the company’s total paid-up share capital plus free reserves as of 31 March 2022. The business revealed in a press release that the estimated maximum number of shares that will be bought back is 1,04,93,827 shares or roughly 1.62 percent of the paid-up share capital of the company. The company would repurchase a minimum of 5,246,913 equity shares based on the minimum buyback amount and maximum buyback price.What is share buyback?A company can repurchase its stock from shareholders or investors as part of a share buyback. It is a tax-efficient method of returning money to shareholders. As fewer shares are available on the market, their value rises as a consequence of the buyback. In India, any buyback is only permitted up to a maximum of 25 percent of the total paid-up capital and free reserves.As explained by Karthick Jonagadla, the founder of Mumbai-based Quantace Research, Paytm is using stock buyback as a tactic due to the steep decline in its share price. All existing directors, including all independent directors, unanimously voted in support of the proposal. However, directors and other important executives of the company will not sell any shares during the buyback phase.Only about 13 months have passed since the disastrous market debut of the loss-making digital payments company, which saw its shares plunge 75 percent from the IPO price. In November 2021, Paytm had raised Rs 18,300 crore through its public issue, the largest in the nation at the time, by offering new shares at a price of Rs 2,150 each.In recent weeks, sell-side analysts have become increasingly optimistic about Paytm stock. Eight out of12 analysts who are monitoring the stock, according to Bloomberg, suggest a buy or equivalent rating, which is the greatest number since the stock began trading.Read all the Latest News, Trending News, Cricket News, Bollywood News, India News and Entertainment News here. Follow us on Facebook, Twitter and Instagram.
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Published on : 2022-12-14 08:26:56
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