Indian financial services firm Paytm said Thursday evening it is considering repurchasing its shares, following a tremulous year that has seen its stock price fall by over 60%.
Paytm said it will discuss with the board on December 13 the proposal to buy back the fully paid-up equity shares of the company, the Noida-headquartered firm disclosed in a stock exchange filing.
“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,” it said in the 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.
The move is especially notable for Paytm, whose shares have fallen over 65% since listing late last year and have never recovered to the issue price of $25.2. Its shares ended Thursday at $6.2.
Paytm nonetheless is sending the signal to the market that it believes its shares are undervalued.
The firm’s arch-rival PhonePe, which is also not profitable and has significantly lower revenue, is in later stages of deliberations to raise about $1 billion from majority shareholder Walmart and others, including General Atlantic, at a valuation of $12 billion, according to a source familiar with the matter. Indian news outlet MoneyControl first reported about the funding talks last month.