India’s leading digital payments and financial services company Paytm completed its ₹850-crore share buyback earlier this month. The company had informed the exchanges on Feb 13 that it has repurchased 15.57 million equity shares, representing 2.4% of the total number of outstanding shares, at a weighted average price of ₹545.93 per share. Consequently, the percentage stake of continuing shareholders will rise on a proportionate basis, though the absolute number of shares held by them remains the same.
Post the extinguishment of shares repurchased via buyback, the Company’s share capital base stands reduced by 15.57 mn shares (ie 2.4%) to 633.77 mn shares
Revised shareholding pattern shows that Mutual funds have further increased their position since December 2022 (from 1.73% to 2.68%)
Stake of continuing shareholders stands enhanced, owing to a reduced capital base. While large shareholders continue to hold the same number of shares on absolute basis, their respective stakes have now increased (Antfin is now 25.47%, Softbank is now 13.24%, Elevation Capital, via 2 entities owning >1%, is now 15.45%)
In case a shareholder crosses the 25% mark due to buyback, SEBI regulations allow 90 days time from the closure of buyback (13-Feb-2023) to restore the stake below 25%
As per SEBI (LODR) Regulations, a listed company is required to submit an updated shareholding pattern with stock exchanges within 10 days of any capital restructuring of the company that results in a change of over 2% of the total paid-up share capital. Accordingly, the company has disclosed its updated shareholding pattern.
Domestic institutional shareholding has increased by 1.11% on account of increase in shareholding of Mutual Funds and AIFs. Mutual funds have increased their position since December 2022, on the back of strong Q3 results (from 1.73% to 2.68%).
Foreign institutional shareholding has reduced from 72.8% to 71.9%. While FDI shareholding saw a reduction, FPI Cat 1 shareholding increased from 6.7% to 10.6% (3.9% increase). According to the latest update, Alibaba has completely exited the fintech giant. The Chinese e-commerce company held a 6.26% stake in Paytm which it sold in two tranches in January and February this year.
Consequent to the buyback, Ant’s holding in Paytm has moved up slightly from 24.86% as of December 31 to 25.47% now, though Ant continues to hold 161.4 million shares in Paytm, the same number of shares as it held before the buyback. SEBI regulations provide a period of 90 days from the date of closure of the buyback to restore the stake below 25%.
Paytm continues to be on a strong growth path. In its recently announced Q3FY23 results, Paytm achieved its milestone of operating profitability, much ahead of its September 2023 guidance. The company’s EBITDA before ESOP cost stood at ₹31 Cr with EBITDA before ESOP margin at 2% of revenues as compared to (27%) a year ago. The fintech giant’s revenue from operations increased 42% YoY to ₹2,062 Cr, driven by growth in its core payments business and sustained growth momentum in credit business and commerce business.