Paytm Share Buyback; IPO turned out to be a super flop, now the company is in the mood for share buyback, investors’ fortunes will change!
companyBig decision in the meeting
In this regard, the board meeting was held on Tuesday and the board of directors of the company took this decision. Paytm’s parent company One97 Communication has fixed the share buyback price at Rs 810 per share and the company has opted for the open market route for the process.
How much benefit to investors
Shares of Paytm closed at Rs 539.50 on BSE on Tuesday. Given this, investors can benefit up to 50 percent or up to Rs 270 per share under the buyback.
How much will the company spend?
Under this plan to buy back shares of Paytm from the market, the maximum buyback price will be Rs 810 per share. Meanwhile, shares of Paytm closed at Rs 538.40 on BSE after the day’s trading on Tuesday. Compared to this, the buyback price is about 50 percent higher. The Rs 850 crore share buyback could cost the company around Rs 1,048 crore including taxes.
Commenting on the company’s buyback plan, Paytm Founder and CEO Vijay Shekhar Sharma said, “We value our shareholders and their journey with us in the public markets. I believe the buyback at this stage will be highly beneficial to our shareholders. It will prove to be a long-term shareholder value enhancer.”
Understand stock buybacks…
In a share buyback process, companies buy back their own shares from the public. Shareholders who want to sell the company’s shares at a profit can offer them for sale. Paytm had launched an IPO worth Rs 18,300 crore and as soon as the IPO opened, investors were on a buying spree. However, investors who invested in the hope of making money faced huge losses at the time of listing.
A headache for IPO investors
The share of Paytm was listed on the stock market on 18 November 2021. The company had set a price band of Rs 2,150 for the IPO, while the shares were listed at a discount of 9 per cent to Rs 1,950 on the BSE. On the other hand, it closed at Rs 1,564.15 on the day of listing, down 27.25 percent from the IPO price. Since then, the stock has been falling steadily. The stock currently closed at Rs 508 on Thursday, which is 76 per cent lower than the IPO price. 438 is the stock’s all-time low.
Investors lost more than lakhs of crores
Investors who invested money in Paytm’s IPO suffered huge losses. Compared to the total IPO, the investment of investors has lost about 1 lakh crores. At the time of the IPO, Paytm’s market cap was Rs 1.39 lakh crore, but by last Thursday it had fallen below Rs 35,000 crore.