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Paytm shares down 9% as Alibaba sells 3% stake in large block deal – The Economic Times

New Delhi: After China’s Alibaba Group sold 3.1% stake in a block deal, shares of new-age fintech , which runs , dropped up to 8.82% to the day’s low at Rs 528.35 today.

Alibaba, which held a 6.26% stake in Paytm as of end-September, sold 3.1% stake in the company for a total of $125 million through a block deal at a price of Rs 536.95 per share, Reuters reported.

Shares of Paytm, which had last month announced an Rs 850 crore share buyback programme, have so far plunged around 74.5% from its IPO issue price of Rs 2,150.

The stock was among the worst performers in the calendar year 2022. The average target price of 11 analysts, 8 of whom have ‘buy’ ratings, however, signals an upside potential of around 66%, shows Trendlyne data.

In a recent report, brokerage firm Morgan Stanley said the fintech would be a key beneficiary of India’s UPI incentive scheme of Rs 2600 crore for promotion of RuPay Debit Cards and low-value BHIM-UPI transactions (P2M) for FY23.

“Apart from banks, Paytm should be a key beneficiary of the above. As per our estimates, Paytm would have received 5-7% of the FY22 incentive, and assuming a similar share for FY23, this would represent 3-5% of our contribution profit estimate (1% higher than what we previously assumed for FY23),” the brokerage firm said.

In its quarterly update earlier in the month, the fintech firm had reported that the total value of loan disbursements in the December quarter rose 357% YoY to Rs 9,958 crore.”The number of loans grew 117% YoY to 37 lakh for the month of December, and 137% YoY to 1050 lakh cumulative loans for the three months ended December 2022,” Paytm had said. The average number of monthly transacting users or MTUs came in at 850 lakh, registering a growth of 32% YoY.

“Alibaba selling shares in Paytm could be good news for shareholders as it reflects that Chinese shareholding is reducing in the company. This would benefit them in FDI and as the company is already on path to profitability, this will further allay investor concerns,” Avinash Gorakshakar, Head Research, Profitmart Securities, said.

“Alibaba seems to be on the exit move from India as it has sold shares in its major investments like BigBasket, Zomato and Paytm. This is a positive for shareholders, as it clears many regulatory paths. In the case of Paytm, the company is on the fastrack to profitability, and has been delivering good business updates,” he said.

Paytm said its focus over the past few quarters has been to be on payment volumes that generate profitability for the company, either through net payments margin or from direct upsell potential.

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