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Paytm shares gain after board to consider share buyback at December 13 meeting

market | Dec 9, 2022 5:53 AM IST

Paytm shares gain after board to consider share buyback at December 13 meeting

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Paytm currently has cash worth over $1 billion on its books.

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Shares of One 97 Communications Ltd., the parent company of Paytm rose as much as 6 percent on Friday after the company announced last night that the board will consider a buyback of equity shares on December 13.
As of date, the company has cash worth over $1 billion on its books, amounting to nearly 25 percent of its current market capitalisation.
The company recently held an analyst meet where it expressed confidence to become free cash flow positive in the next 12-18 months and also achieve break-even on an adjusted EBITDA basis by September next year. Adjusted EBITDA does not include one-offs like share compensations and other exceptional items.
Paytm was one of India's largest IPOs and went public in November last year at Rs 2,150 per share. Shares have declined nearly 70 percent from their IPO price to fall to an all-time low of Rs 438.35 recently.
The company's lock-in period for pre-IPO investors ended last month, post which, over 7.5 percent equity has changed hands with marquee investors including Softbank SVF India Holdings and Alibaba selling their stake in the company.
Analysts are also turning favourable towards the stock in recent times. CLSA on November 29 upgraded the stock to buy from sell, citing a favourable risk-reward post the recent price correction. JM Financial also upgraded the stock to buy with a price target of Rs 600.
Goldman Sachs has one of the highest price targets on Paytm that of Rs 1,100 with a buy rating. Post the analyst meet, the brokerage said that they were encouraged by the new disclosures made by the company with regards to free cash flow and profitability. However, they also mentioned that timelines around resolution of merchants and customer onboarding remains unclear.
Another point to note is that despite analysts turning favourable, all their price targets are well below the company's IPO price.
Interestingly, on November 29, CNBC-TV18 also highlighted Paytm as part of its dealing room chatter with dealers anticipating an important corporate development in the stock soon. Since the CLSA upgrade and CNBC-TV18's mention, Paytm's shares are up 10 percent from closing levels of November 28.
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