Paytm’s stock price fell over 2 per cent after the parent company One97 Communication approved the first buyback plan worth Rs 850 crore worth of share. The board members of the company approved the buyback at 50 per cent premium to Tuesday’s closing price.

The stock opened at Rs 544 today, but had dropped more than 2 per cent by around 2:10 p.m. on Wednesday, dampening the hopes of shareholders and market participants who had anticipated a rally in the company’s stock price following the buyback announcement.

Paytm said in a statement to stock exchanges that the buyback will be conducted at a maximum price of Rs 810 per share, and that it will be done through the open market.

Paytm expects to spend Rs 1,048 crore on the buyback plan, with up to Rs 850 crore going toward purchasing shares and the rest going toward accounting for applicable buyback taxes. At the end of the September quarter, the company had a cash reserve of Rs 9,182 crore, which included unused proceeds from its IPO. However, according to regulations, the company cannot use the IPO proceeds for a buyback.

The buyback is expected to take six months to complete. It could help the fintech company’s stock, which has dropped more than 75 per cent since its IPO (initial public offering) allotment price of Rs 2,150.

However, proxy advisory firm Institutional Investor Advisory Services (IiAS) raised concerns about the timing of the Paytm buyback on Monday, citing the company’s lack of cash flow. It also expressed concerns about its future growth strategy and liquidity situation.

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