Shares of digital payments and financial services firm Paytm have nearly halved from its initial public offering (IPO) issue price since its dismal listing and a spate of bearish views, underperforming the Nifty sharply and trading at a discount to global and private peers.
The stock is trading over 1% lower today on the BSE despite recording over 4-fold jump in loan disbursals during the October-December 2021 period. Paytm share price has plummeted over 47% from its issue price of ₹2,150 apiece, and experts see the pressure to continue in near-term.
“Paytm shares will continue to be under pressure in the near term as ‘long-term’ domestic institutions continue to exit their anchor allocations within 2 months of listing. The current approach of the management of leaving the business strategy to the imagination of investors is only going to further dent the stock price,” said Abhay Agarwal, Founder and fund manager at Piper Serica, SEBI Regd. PMS.
The gross merchandise value (GMV) of the company more than doubled to ₹2.5 lakh crore during October-December 2021 compared to ₹1.12 lakh crore it registered in the corresponding quarter a year ago.
Ravi Singh, Vice President & Head of Research, Share India Securities expects Paytm stock to see more downside and touch the levels of ₹1050-1000 in near terms. He has advised investors to remain cautious towards taking fresh positions for time being.
One 97 Communications Ltd, Paytm’s parent company, raised $2.5 billion in its IPO, but a 27% plunge in its 18 November debut made it one of the worst initial showings by a major technology firm since the dot-com bubble era of the late 1990s.
“Paytm’s payment business accounts for about 70% of revenue, which will be under threat if there are any regulatory changes . Also, its entry into insurance sectors has been rejected by regulators. The stock is trading at about 17 time FY23 sales which seems overvalued. We expect a small retracement till ₹1336.35 if any buying happens and further downwards ₹724.6,” said Manoj Dalmia, Founder and Director at Proficient Equities Private Limited.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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