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The shares of One97 Communications, which operates Paytm, slumped further by 13 per cent on Monday even as the company reported a 131 per cent increase in its gross merchandise value (GMV) in October 2021 on a year-on-year basis.
The stock had crashed 27.25 per cent on Thursday, the first day of listing, as high valuation impacted investor sentiments. The company’s market cap is down by ₹50,000 crore in two days of trading.
Shares of recently listed companies like Policybazaar (PB Fintech), Nykaa (FSN E-Commerce Ventures) and Zomato also came under pressure. Zomato was down by nearly 3 per cent while Policy Bazaar slumped 6.6 per cent on Monday on the BSE.
Macquarie target at ₹1,200
Hours before Paytm’s listing on Thursday, research firm Macquarie had come up with a ‘Sell’ report on the stock and said the company was a cash-guzzler and lacked focus.
Global brokerage firm Macquarie Research said it expected the Paytm stock to hit as low as ₹1,200, implying 44.2 per cent potential downside from its issue price, citing expensive valuations compared to global fintech players, and Paytm’s business model lacking focus and direction. “Paytm’s valuation, at around 26x FY23E price to sales (P/S), is expensive especially when profitability remains elusive for a long time. Most fintech players globally trade around 0.3x-0.5x PSg (price-to-sales growth ratio) and we have assumed the upper end of this band,” said Macquarie, which has initiated with an ‘Underperform’ rating.
Positive numbers
On its part Paytm tried to assuage investor concerns by releasing some positive numbers. It reported a 418 per cent year-on-year growth in the value of loans disbursed in October. “The October 2021 month saw a continued increase in adoption across our different financial services products. The lending business continued to show very strong growth as a result of rapid scale-up of all of our lending products, including postpaid, consumer loans and merchant loans”, the company said adding that the number of monthly transacting users (MTUs) increased more than 35 per cent in October 2021 to 63 million as compared to 47 million in the same month last year.
Vijay Shekhar Sharma, founder of Paytm, told his employees in a town hall not to get worried by the market perception and focus on expanding the business. According to a Bloomberg report, Sharma drew parallels between himself and Elon Musk of Tesla.
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