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Paytm will spend up to $127 million to repurchase it shares, the company’s board approved on Tuesday, as the Indian financial services firm looks to calm investors after a tumultuous period that has wiped about 60% value from its shares this year.
The Noida-headquartered firm, which went public late last year, made the proposal last week, a move that saw its shares gain momentum. The share ended the day at 538.4 Indian rupees, or $6.53.
The board members “unanimously” approved the firm’s proposal to buyback fully paid-up equity shares at a price not exceeding 810 Indian rupees ($9.82) and spend $103 million excluding taxes and other expenses in repurchasing the shares, Paytm disclosed in a stock exchange filing.
Buybacks are not uncommon and are generally seen as a way companies could reward their shareholders. Many firms have ramped up repurchasing their shares this year, taking advantage of the falling prices in the public markets globally. But it’s not common among loss-making firms.
“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,” Vijay Shekhar Sharma, founder and chief executive of Paytm, said in a statement.
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