One 97 Communications Limited, the parent entity of Vijay Shekhar Sharma-promoted Paytm, will hold a board meet on December 13 to consider a proposal for a share buyback, the fintech major disclosed to the exchanges on December 8.
“Pursuant to Regulation 29 of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015, as amended (“SEBI Listing Regulations”), we wish to inform you that a meeting of the Board of Directors of the Company is scheduled to be held on Tuesday, December 13, 2022 to consider a proposal for buyback of the fully paid-up equity shares of the Company, in accordance with the applicable provision under the Companies Act, 2013 (including the rules and regulations framed thereunder), the Securities and Exchange Board of India (Buy-back of Securities) Regulations, 2018 (as amended), and other applicable laws,” according to a disclosure from One 97.
“The management believes that given the Company’s prevailing liquidity/ financial position, a buyback may be beneficial for our shareholders. The outcome of the Board meeting will be disseminated to the stock exchanges after conclusion of the Board meeting on December 13, 2022, in accordance with the applicable provisions of the SEBI Listing Regulations,” the announcement added.
A few weeks earlier, the company’s stock came under pressure when investor Softbank launched a block deal to sell shares worth around $200 million post the end of the lock-in period for pre-IPO investors.
In a share buyback or repurchase, a firm buys back its own shares from investors or shareholders usually at a price higher than the market price. It is considered an alternative, tax-efficient way to return money to shareholders.
In a recent interaction with analysts, One 97 Communications sounded optimistic on its growth prospects and reasserted its guidance on turning profitable at an operating level next year.
“Management stated that the journey to attain operating profitability (EBITDA before ESOP cost) via consistent margin improvement has exceeded its expectations in the past few quarters,” ICICI Securities, which attended the company’s analyst day meet, said in a note.On November 28, foreign brokerage firm CLSA upgraded its outlook on the fintech major’s stock from “sell” to buy” and added that cash burn should end in “another 4-6 quarters.