LI Network
Published on: 11 July 2023 at 13:37 IST
Paytm, India’s largest digital payments provider, is not allowed to use the proceeds of its mega initial public offering (IPO) for the proposed repurchase of its own shares.
The company has a liquidity of Rs 9,182 crore, and its board is scheduled to meet on 13 December 2023 to consider a share buyback proposal. The management believes that a buyback may be beneficial for shareholders given the company’s strong liquidity/financial position.
Regulations prevent any company from using IPO proceeds for a share buyback, and sources indicate that the firm is close to cash flow generation, which will be used for business expansion.
Paytm’s pre-IPO cash reserves are likely to be used for the buyback, and generated cash flow will be used for future expansion. The company has not disclosed any details about the buyback, but it meets the criteria for a buyback program. Paytm reiterated that it will attain profitability by the end of September 2023.
The company’s recent numbers showed revenue surging by 76% YoY, and losses narrowing by 11% QoQ. The law prohibits side deals or negotiated deals for a buyback, and the company is likely to disclose more details after the board meeting.
Paytm’s loss in the June quarter of 2022-23 was Rs 628 crore, which was reduced to Rs 588 crore in the September quarter. The company’s Friday closing price on the BSE at Rs 545 is lower than the IPO price of Rs 2,150.
