Paytm announced on Thursday that its board of directors will meet on December 13 to discuss a bid for a share buyback . ICICI Securities, a brokerage firm, reiterated its stock rating to Buy and continued to hold Paytms stock at a target price of Rs 1,400 with a 175 percent upside .
New Delhi, December 10: Paytm, India's largest fintech company, announced on Thursday that its board of directors will meet on December 13 to discuss a bid for a share buyback.Paytm's CEO, whose growth prospects are highly improved and that top brokerage company Dolat Capital is reiterated its targets for making money at an operating level next year.ICICI Securities, a brokerage firm, reiterated its stock rating to Buy and continued to hold Paytms stock at a target price of Rs 1,400 with a 175 percent upside.Paytm has 649 million shares outstanding and a net cash and investment balance of Rs 92 billion as of September 22.
We believe this step is extremely beneficial and will improve company morale, it said.Dolat further added: We believe the following factors could have contributed to this decision: business traction, both in terms of growth and profitability, is increasing faster than was anticipated at the time of the IPO (initial public offering).The estimated annualized burn rate for the current time is less than $75 million.We think the buyback announcement would alleviate some investor fears regarding the company's profitability and cash generation strategy (accumulated 30 per cent of incremental revenues into incremental Ebitda on LTM (last twelve months) basis, with the contribution margins currently at 44.6 percent, implying further margin increases).According to Dolat, the optimal amount of the buyback will be around Rs 8-10 billion through the open market purchase route. ICICI Securities' Kunal Shah said that a large portion of the remaining stock (if any) would be absorbed in the coming 12-18 months, indicating that the company is ahead of schedule and that it will be a surprise to the customers.In the next 12-18 months, the corporation is expected to begin producing free cash flow (FCF).Given the company's current liquidity status, the board of directors of Paytm is set to meet on Tuesday, December 13, 2022, to discuss a buyback proposal, according to ICICI Securities.While Paytm currently has a large cash reserve of around Rs 92 billion, the board hasn't made any progress in its report.