Buyback divide: Why market cheers Infosys but boos PayTM

Infosys and PayTM announced their share buyback plans within weeks of each other, but the investor reaction couldn't have been more extreme. While Infosys' share price - it reflects the mood of the market - has been on an uptick, PayTM's has nosedived. So, let's understand why there's such a huge difference in reaction to the buyback news. PayTM On December 12, PayTM's parent company announced they would buy back shares at Rs 810 each. The share price at the time of the announcement was Rs 534. Despite the hefty premium of 50 per cent, its stock price has tumbled over 3 per cent since then, signalling investor unhappiness. This may be due to the following reasons: Companies usually repurchase shares when it has a positive cash flow, meaning it has more money than needed to maintain their growth path. However, PayTM's buyback plan causes head-scratching as it has been posting losses (as you can see in the table below). Although the top management has assured they have a "clear path to cash flows", the market remains unco