Shares of Paytm parent One 97 Communications surged more than 5% in morning trade on December 9 after the company said its board would consider buying back shares on December 13.

“We would like to inform you that a meeting of the company’s board of directors is scheduled for Tuesday to consider a proposal to repurchase fully paid-up shares of the company,” the company said in an exchange filing.

“Management believes that a buyback could benefit our shareholders given the company’s current liquidity and financial position,” Paytm added.

The stock was up 5% at Rs 532.80 by 9:30 am. The company made its first buyback a year after going public. It had yet to report earnings.

Paytm’s net cash reserves (including cash equivalents and investable balance) as of September 2022 stand at Rs 9,182 crore, which has about Rs 5,600 crore remaining from the Rs 8,300 crore IPO proceeds.

The company has yet to decide on the price and size of the cashback. The repurchase price is usually higher than the prevailing price, providing exiting shareholders with a profitable exit route.

Most analysts have bullish ratings on the stock. According to Bloomberg data, eight of the 12 analysts covering the stock have “buy” ratings, and three have “hold” ratings. Only one analyst thinks you should short the stock.

Some of them have seen the stock double from current levels. JPMorgan and Citigroup have price targets of Rs 1,100 and Rs 1,055, respectively. However, the stock has fallen to a quarter of its offering price.

Many of them are convinced by management’s newfound emphasis on generating profits. However, some see it as being plagued by past problems and regulatory risks rather than pouring cold water on its plans.