‘Paytm should buyback at IPO price’: Fintech major slammed on Twitter over share buyback plan

Paytm’s announcement on Thursday that it was considering buying back its own shares drew criticism on Twitter, even as shares of the fintech major rose 7% on Friday.

The announcement comes at a time when shares of the digital payments giant are trading 75% below the list price of Rs. 2,100.

Paytm’s parent company, One97 Communications, said its board will meet on Dec. 13 to consider the buyback proposal, without giving details.

“Management believes that given the Company’s prevailing cash/financial position, a buyback could be beneficial to our shareholders,” One97 said.

Some Twitter users said the move even shows a lack of corporate governance at the company.

“#Paytm should #buyback at IPO price,” said one Twitter user.

“How can a company that isn’t cash flow positive buy back its shares?” wondered another Twitter user.

Paytm considering buyback.

With what?

How does a company that isn’t cash flow positive buy back its stock?

Isn’t it a well-funded company?

— Intrinsic Value_Nikhil Gangil🇮🇳 (@Intrinsic_cycle) December 8, 2022

“If Paytm’s idea is to support the stock price, they should look at what happened to DLF after the buyback announcement,” said another Twitter user.

Paytm to consider buyback!

1 year after they raise money

The last company I remember doing this about a year after it went public was DLF in 2008.

If Paytm’s idea is to prop up the stock price, they should look at what happened to DLF after the buyback announcement. pic.twitter.com/6nN0RzuH1i

— Peeyush Chitlangia (@peeyushc) December 9, 2022

Some even equated Paytm’s announcement with Nykaa’s recent stock split decisions.

“PayTM is not making any money but wants to ‘consider buying back shares’. Nykaa split the shares and blocked investors from selling them.

PayTM isn’t making any money, but says it “will consider buying back shares.”

Nykaa split the shares and prevented investors from selling.

Very good corporate governance red flags are visible here.

— Harshil Mehta (@MehHarshil) December 9, 2022

According to the latest balance, the cash position of #PayTM is around Rs. 6000 crores
In this case, #BuyBack will not be more than Rs 1000 Crores, which is only 3% of the current market capitalization
The stock price is unlikely to make a dent. Punters should be careful when increasing their shares

— sandip sabharwal (@sandipsabharwal) December 9, 2022

“As of the latest balance sheet, the cash position of #PayTM is around Rs. 6000 crores. In this case, #BuyBack will not be more than Rs. 1000 crores, which is only 3% of the current market cap

The stock price is unlikely to make a dent. Punters should be careful when adding to stocks,” tweeted Sandip Sabharwal, a stock market analyst.

Also Read: Paytm’s Parent One 97 Communications Considers Share Buyback at December 13 Board Meeting