Paytm shares slump further after lackluster listing, down 13%

Our Bureau Mumbai | Updated on November 22, 2021

At 10:56 am on Monday, Paytm was trading at ₹1,357.85 on the BSE, down ₹206.30

The shares of One97 Communications, which operates Paytm slumped further during the morning trade on Monday after a tepid debut in the previous session.

The stock had debuted at 9 per cent discount on Thursday, with stock price crashing 27.25 per cent further at closing as high valuation impacted investor sentiments.

At 10:56 am on Monday, Paytm was trading at ₹1,357.85 on the BSE, down ₹206.30 or 13.19 per cent, near its new low of ₹1355.00. It had opened at ₹1,500.00 against its previous close of ₹1,564.15. It recorded an intraday high of ₹1,518.15.

On the NSE, it was trading at ₹1,356.85, down ₹203.95 or 13.07 per cent.

In the first few hours of its market debut, the overall investor wealth eroded by over ₹35,000 crore.

Also read: Paytm listing: No cash back, it’s ₹35,000-cr investor wealth gone

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.

The Macquarie report added to the panic, giving an “Underperform” rating to the stock with a target price of ₹1,200 a share, down 40 per cent from its issue price.

“Dabbling in multiple business lines inhibits Paytm from being a category leader in any business except wallets, which are becoming inconsequential with the meteoric rise in UPI payments. Competition and regulation will drive down unit economics and/or growth prospects in the medium term in our view. Unless Paytm lends, it can’t make significant money by merely being a distributor. We, therefore, question its ability to achieve scale with profitability,” Macquire said in the note to its investors. Paytm’s valuation, at 26 times the FY23E price-to-sales, is expensive especially when profitability remains elusive, it added.

“Longer term, take rates in the distribution business will be driven southwards by competition and regulation,” it further said.

Parth Nyati, Founder, Tradingo had said, “The company has been loss-making, and there is no sign to turn profitable shortly. The company got listed at 1950 apiece on NSE, which was in line with our estimates.”

“We feel due to the brand the company sought high valuation and it might see a correction in the near term,” added Tyagi.

Separately, the company over the weekend announced that driven by festive season spends, it has recorded a 131 per cent increase in its gross merchandise value (GMV)—or payments made to merchants through its platform—in October 2021 on a year-on-year basis to ₹83,200 crore ($11.2 billion) from a level of about ₹36,000 crore in same month last year.

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, it said in a regulatory filing on its operating performance for October on Sunday night.

Paytm also recorded a 418 per cent year-on-year growth in the value of loans disbursed in October.

Published on November 22, 2021

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