- Buyback size of up to ₹850 crores approved, in line with SEBI regulations
- Maximum buyback price of ₹810 per share (50% premium to the closing price as on board meeting date)
- All directors present voted unanimously in favour of the proposal, including all independent directors
Our Board has approved the proposal for buyback of equity shares on Tuesday (December 13, 2022). All directors present voted unanimously in favour of the proposal, including independent directors. We will undertake a buyback of up to ₹850 crores (excluding buyback taxes and other transaction costs) at a maximum price of ₹810 per share, and have opted for the open market through stock exchanges method, which is to be completed within a maximum period of 6 months. Our Board has determined that a buyback of the company’s shares would be accretive for its shareholders, citing strong financial performance, clear path to cash flow generation and excess cash as a result.
Over the last 18 months, we have been able to grow, and improve monetisation and unit economics for payments business. At the same time, our lending business has shown tremendous growth, with disbursals increasing from ₹687 crores in the March 2021 quarter, to ₹7,313 crores in the September 2022 quarter. This is a clear demonstration of operating leverage, resulting in improvement of EBITDA before ESOP cost margin from -51% in the quarter ending March 2021 to -9% in the most recent quarter.
While we will continue disciplined investments to drive long-term value creation, across technology, sales, marketing, and other areas, our Board has determined that there is surplus liquidity that can be productively applied to a buyback of shares. This decision has been taken after a detailed review of projected investment requirements to drive long-term value creation. We reiterate that proceeds from the IPO are not being directed towards the share repurchase plan.
Our Board believes that this buyback is a sign of confidence that we are on a clear path to deliver cash flow profitability, and this buyback will not have any impact on our growth plans in the near future or on our profitability plans.
Until completion of the buyback period, our senior management and board members – Vijay Shekhar Sharma (Founder & CEO) and Madhur Deora (Executive Director, President & Group CFO) – will not be participating in any sale of shares. They remain focussed on long-term growth, and value creation for all stakeholders.
Our Founder & CEO Vijay Shekhar Sharma said, “Over the last year, there is clear business momentum, and we are ahead of our plans. Looking at the monetisation opportunities in our core payment and credit business, we feel confident to generate healthy revenues and cash flows to invest in sales, marketing and technology. We value our shareholders and their journey with us in the public markets. I believe that a buyback at this stage will be immensely beneficial for our stakeholders and will drive long-term shareholder value.”
In October and November 2022, our operating performance demonstrated strong growth in the lending business with the annualised run rate for the loan distribution business now at ₹39,000 crores ($4.8 billion). Moreover, we continue to maintain our leadership in offline payments with merchants paying subscriptions for payment devices exceeding 5.5 million.
We are ahead of its previously-stated plans to achieve EBITDA before ESOP costs profitability by quarter ending September 2023.
Assuming a full buyback of ₹850 crores, and applicable buyback taxes, the total outlay will be in excess of approximately ₹1,048 crores.
You can access our exchange filing here: https://www.bseindia.com/xml-data/corpfiling/AttachLive/ab713ee7-add3-4331-bcec-3cde19540eb6.pdf