Paytm plans buyback of shares driven by strong finances

Indian mobile payments pioneer Paytm has informed the exchanges about its plan for  buyback of shares. “The management believes that given the Company’s prevailing liquidity / financial position, a buy-back may be beneficial for our shareholders,” said the company in an exchange filing.

The company is proposing to hold a board meeting for the approval of the buyback on December 13. Paytm, which got listed in the stock exchange in November 2021, has been clocking strong revenue growth over the past few quarters. The strong financial position that the company has mentioned comes from this growth, supported by its strong business model and efficient monetization from key business such as payments, devices and financial services.

The company’s revenue in the last quarter was Rs 1,914 crore. Additionally, as per its last earnings release, Paytm continues to have a strong net cash, cash of equivalent and investable balance of ₹9182 crore as of Sept 2022. In fact, the company’s strong liquidity was also called out by analysts at CLSA recently who said “We note that the company has more than US$1bn net cash.”

The company in its recent analyst meeting where it had outlined key growth drivers had also said that it expects to become cashflow positive in the next 12-18 months. This is aligned with the company’s earlier guidance of turning EBITDA breakeven before ESOPs by Sept 23 quarter. This signals management’s confidence in its strong financial performance and growth in the next few years.