Paytm grants 1.7 million new ESOPs

One97 Communications, which owns digital payments firm Paytm, has granted 1.7 million new employee stock options (ESOPs) to its staff under One97 Employees Stock Option Scheme 2019. 

Further, in accordance with the terms and conditions of the scheme, the company said 53,250 stock options were cancelled.

“Pursuant to Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (“SEBI Listing Regulations”), we wish to inform that the Nomination and Remuneration Committee of the Company (NRC), in its meeting held on July 20, 2023, has granted 17,06,829 stock options under One 97 Employees Stock Option Scheme 2019 (ESOP 2019) to the eligible employees,” the company said in an exchange filing.

At the current share price of Paytm, which is around Rs 851 a piece, the total value of the new stock option grant comes out to be around Rs 144 crore. 

Each stock option is convertible into one fully paid-up equity share having a face value of Rs 1 each, said Paytm. 

The company did not reveal information on the number of employees who will benefit from the new stock option grant. 

The exercise price of these stock options is Rs 9 per stock.  

Previously, the financial technology firm had granted 3.97 million new ESOPs worth Rs 277 crore to its staff. The Noida-based fintech had also allotted 177,114 equity shares to employees who have vested their options. The company later clarified that the Esops allotted were a part of Paytm’s existing stock option pool. 

June quarter results today

Since listing in November 2021, the stock of One 97 Communication has been pummelled and is still down around 75% from its IPO price of Rs 2,150 per share. 

However, while trading well below the IPO price, investors and analysts are warming up to its stock on the back of hopes of improvement in contribution margin and operating leverage, which may drive operating profitability.

The stock of Paytm, which fell to an all-time low of Rs 438 earlier this year from its IPO price, has nearly doubled and is now up over 60% on a year-to-date basis, and nearly 90% from the lows of Rs 438.

The stock hit a 52-week high on June 14, due to strong operational performance in the last two quarters.

The company turned operationally profitable in the December quarter, while net losses narrowed in the March quarter as well. The company earned Rs 7,990 crore in revenue as it cut down its losses by 26% to Rs 1,776 crore.

In a note earlier this month, Motilal Oswal suggested a target of Rs 1,050 on the stock.

“We believe that after reporting adjusted Ebitda breakeven in Q3FY23, almost a year ahead of its guidance, Paytm is on track to report Ebitda breakeven in H2FY25. We raise our FY25E GMV and disbursement estimates by 5% and 21%, respectively, and estimate the mix of financial revenue to increase to 32% by FY25 from 19% in FY23," it said.

Meanwhile, Dolat Capital had a price target of Rs 1,250 on Paytm; ICICI Securities at Rs 1,055; and Axis Capital at Rs 1,000. 

On Friday, shares of Paytm were trading 1.51% lower at Rs 838.50 ahead of the company's June quarter results announcement later in the day.