‘Gratitude’: Paytm boss Vijay Shekhar Sharma amid crucial AGM test

Paytm founder Vijay Shekhar Sharma, during the company's annual general meeting (AGM) held today, exhibited confidence while tweeting what one of the shareholders said during the crucial meeting that will decide his fate as MD and CEO for another five years and his high remuneration.

Reacting to the developments in the AGM, Sharma tweeted: "From a shareholder in our AGM: Har ghar tiranga, har haath Paytm." The billionaire boss of India's biggest fintech later sent out a cryptic tweet, saying: "It was such an energising AGM. #Gratitude #PaytmKaro."

Sharma is facing the biggest test today since a poor show of the fintech company's initial public offering (IPO) listing in November 2021. The company's AGM will today decide if the billionaire founder should continue to serve the company as MD and CEO for the next five years or not.

Shares of the digital payments and financial services company dipped 1.86% or 14.60 points on Friday ahead of the company's annual general meeting (AGM). Among other matters, the AGM will also decide on a crucial matter pertaining to the reappointment of the Paytm founder for another five-year term.

Notably, three domestic voting advisory firms -- Institutional Investor Advisory Services (IiAS), Stakeholders Empowerment Services (SES) and InGovern Research Services -- had earlier opposed Sharma's reappointment and remuneration decided for the position, asking the shareholders to vote against the resolution.

InGovern said Sharma is not liable to retire as director of Paytm by rotation, which it cited as the main issue and advised the shareholders to vote against the resolution of reappointment.

SEC said Sharma is holding both the powerful positions of chairman and managing director, and that the company should have separated the positions. It also raised objections against high remuneration of Sharma.

Mumbai-based proxy advisory firm IiAS said it is against his reappointment as managing director and is unable to support the company's upcoming resolution.

IiAS had said that Sharma made “several commitments in the past to make the company profitable, however, these have not played out”. The Paytm board must consider professionalising the management, said the Mumbai-based proxy advisor.

The proxy advisor also claimed that Sharma's annual remuneration is higher than those of all S&P BSE Sensex companies, most of which are profitable. “In FY22, the company reported a cash loss of ₹12 bn and losses in the first quarter of FY23 is high.” It said the Paytm stock has fallen 63.6% from its issue price of ₹2,150 since its listing on November 18, 2021, resulting in wealth destruction for shareholders.

The IiAS had estimated that Sharma was likely raking in remuneration of over ₹796 crore in FY23, which includes 21 million stock options at ₹9 exercise price, which is a deep discount to the market price on the date of grant (fair value spread across the vesting period).

Meanwhile, Paytm's consolidated loss for the April-June quarter of 2022-23 widened to ₹645 crore from ₹382 crore in the year-ago period. However, the digital payments firm posted an 89% growth in revenue in the first quarter at ₹1,690 crore from ₹891 crore during the same quarter last year.

Brokerages also have mixed ratings on the counter. Macquarie Capital Securities retains an “underperform” rating on the stock, with a target price of ₹450, implying a potential downside of 50%. CLSA, too, maintains a “sell” rating on the stock, with a target price of ₹650. Axis Securities, however, maintains a “buy” rating on the Paytm stock.

The Paytm stock has fallen 63.6% from its issue price of ₹2,150 since its listing on November 18, 2021, resulting in wealth destruction for shareholders.

The Paytm stock opened gap-up at ₹790 today as compared to the previous close of ₹ 786.45 but kept on dipping, only to close at ₹771.85 on the Bombay Stock Exchange. The stock had touched an intraday low of ₹767.25 (-2.44%) during the day. However, the stock movement was largely in line with the sector and the benchmark Sensex, which dipped 1.95% and 1.08%, respectively.