The board of One97 Communications Ltd, the listed entity that runs Paytm, on Tuesday approved a share buyback programme worth ₹850 crore via open market route through stock exchanges method.

The company will undertake a buyback of up to ₹850 crore (excluding buyback taxes and other transaction costs) at a maximum price of ₹810 per share, it said in a late evening filing with stock exchanges.

Assuming a full buyback of ₹850 crore and applicable buyback taxes, the total outlay will be in excess of approximately ₹1,048 crore.

“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”, said Vijay Shekhar Sharma, Founder & CEO - Paytm.

“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”.

All directors present voted unanimously in favour of the proposal, including all independent directors. The company’s directors and key management personnel will not sell any shares during the buyback period

Paytm reiterated that proceeds from the IPO are not being directed towards the share repurchase plan.

Paytm board believes that this buyback is a sign of confidence that the company is on a clear path to deliver cash flow profitability, and this buyback will not have any impact on its growth plans in the near future or on its profitability plans.

The buyback move comes at a time when the Paytm stock has plunged about 75% since its listing last November.

While a buyback is expected to help stem the rout in Paytm shares at least temporarily, several investors are questioning the attempt to manage the stock price rather than putting the cash to use for business.

“There is little merit in bucketing cash this way,” said Institutional Investor Advisory Services India Ltd., a proxy advisory firm, in a note on Monday. Unless the shares are repurchased at more than 2,150 rupees apiece — the price at which they were sold in the IPO — the buyback will favor only Paytm’s pre-IPO shareholders and employees, the note added.

Paytm shares closed at ₹538.4 on Tuesday, up ₹9.65 over previous day’s close of ₹528.75 per share at NSE.

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