All About PayTM Buy Back offer and Reason for Buyback

you must be wondered why paytm is having buy back inspite of making losses?

Its been a year since Paytm IPO got listed and PayTM haven't gave any impressive returns in last 365 days. lets explore the latest news on share buy back by PayTM what made them to have a buy back offer.

Vijay Shekar Sharma aiming high share price of Paytm through buyback offer

To begin with that PayTM is a loss making company with ₹232 Million net loss in the year ended March. That's roughly about $2.8 Million. A loss making company spending money on repurchasing shares will raise eyebrows. The second reason is that it was just raised funds barely a year ago $1 billion via the sale of new shares in its IPO, ostensibly for reasons of growth and expansion and now it has spare cash so that again has raised eyebrows. A buy back at less than the IPO price which was above ₹2000 rewards pre IPO investors and employees as noted by a well known proxy advisory firm IIAS in a note that they put out just hours ago, yesterday before for shareholders. and finally if I may add, this is a hyper competitive sector, the fintech sector and it's just about to witness an Ambani hailstorm. They would storm we just had Billionaire Mukesh Ambani's company Reliance Industries Weeks ago announced that it is reorganizing and aggregating all of its financial services businesses into one in hopes to list it soon. Now you would think a competitor like PayTM would be building a war chest. If it seems such a big competitor come into the marketplace instead, Paytm prefers to repurchase shares. it's actually lost about quarter of its value and you know last week when they disclosed this proposal for this buyback, it's share price actually shot up. I mean that's not unusual overall, but you know I'll give a walkthrough on all this.

So the reason why the share price rallied hard last week when the news of the buyback proposal first hit the market was one technical reason obviously, which is that you know, the number of outstanding shares will reduce and that will improve EPS and all other financial ratios. That's one. Second, analysts and investors were reading into this a statement of strength. The company that it was going to exceed its expectations with regards to improving operating metrics. So the second one hopes that its financial performance will be better than anticipated for the second-half of this year and next year and that's why we saw the share price move up. We also saw the share price move up because they buy back and potentially. Center any large sale of shares now in November the locking period on pre IPO investors came to an end. There were fears of, you know, additional share sales taking place in the marketplace and therefore a buyback could potentially counter that. So you know for all of these reasons analysts and investors were somewhat infused. This week we saw the shafts rally, you know, and in fact they're expecting more buybacks from this company. lets wait for the another move of PayTM CEO, Vijay Shekar Sharma and lets hope that share price move ahead and give positive returns to the investor.

- Team Finance Plus NX