Why Paytm took such a decision of Buyback of shares?
Why paytm took such a decision of Buyback of shares?
One97 Communications, the parent company of paytm, said on tuesday that the board has approved the buyback of shares up to Rs 850 crore through the open market. These shares will be bought back at a maximum price of Rs 810 per share. The indicative maximum number of shares to be bought back is 1,04,93,827 shares, which is approximately 1.62% of the total equity capital of the company.
The company will use at least 50% of the amount set aside for buyback of shares. The company had announced on december 9 that the board would consider share buyback.Ahead of the meeting, shares of the payment gateway service provider were trading higher. The stock closed up 2% at Rs 539.40. The announcement is unlikely to lead to a significant rally in the stock as the buyback is not being done through the tender offer route, which allows shareholders to tender shares at a premium.It is known that in order to reward the shareholders, companies give back part of the profits through dividends or share buybacks. Many times companies assume that the stock is undervalued and in such a situation share buyback is also done to instill confidence among the shareholders. Actually companies buy back the shares of their company from the investors and these shares are bought at a higher rate than the current market price. Let us tell you that year-to-date, the stock has declined by more than 67% due to selling in new-age technology companies globally.
One97 Communications, the parent company of paytm, said on tuesday that the board has approved the buyback of shares up to Rs 850 crore through the open market. These shares will be bought back at a maximum price of Rs 810 per share. The indicative maximum number of shares to be bought back is 1,04,93,827 shares, which is approximately 1.62% of the total equity capital of the company.
The company will use at least 50% of the amount set aside for buyback of shares. The company had announced on december 9 that the board would consider share buyback.Ahead of the meeting, shares of the payment gateway service provider were trading higher. The stock closed up 2% at Rs 539.40. The announcement is unlikely to lead to a significant rally in the stock as the buyback is not being done through the tender offer route, which allows shareholders to tender shares at a premium.It is known that in order to reward the shareholders, companies give back part of the profits through dividends or share buybacks. Many times companies assume that the stock is undervalued and in such a situation share buyback is also done to instill confidence among the shareholders. Actually companies buy back the shares of their company from the investors and these shares are bought at a higher rate than the current market price. Let us tell you that year-to-date, the stock has declined by more than 67% due to selling in new-age technology companies globally.