Paytm will buy back shares worth Rs 850 crore at Rs 810

Paytm's parent company One97 Communications has approved a share buyback plan of Rs 850 crore on 12 December. This does not include buyback tax and other transaction costs. These shares will be bought from the open market at a price of Rs 810 per share and within a maximum period of 6 months. The company has informed the stock exchanges about this.
Paytm said that the indicative maximum number of shares bought back at the maximum buyback price and maximum buyback size would be 10,493,827. This is approximately 1.62% of the paid-up share capital of the company as on March 2022. Including a full buyback of Rs 850 crore and buyback tax, the total amount will exceed about Rs 1,048 crore.
The buyback price is at a premium of around 50% to Tuesday's closing price. The issue price of Paytm shares was Rs 2,150. Its listing was done on 18 November 2021 for Rs 1,950 at a discount of about 10%. On December 13, 2022, this share was closed at Rs.539.50. That is, this share is still more than 70% below the issue price.
In share buyback, companies buy back their own shares from the public. Usually, companies pay a premium to the current share price in share buyback. Companies buy back their shares mainly to create value for their shareholders. Here, value refers to the increasing share price. In a buyback, the company cannot force any shareholder to sell their shares.