Paytm shares crash
Shares of One97 Communications, the parent company of Paytm, were deep in the red as the anchor lock-in period of 30 days since the listing ended on December 15.
The stock fell over 13 percent to an intraday low of Rs 1,297.70 on the BSE, close to its record low of Rs 1,271.25. At 3.10 pm, the stock was trading 8 percent lower at Rs 1,376 on the BSE.
Its trading volume spiked to over 1 crore shares on the National Stock Exchange and the BSE, more than seven times its one-week average of 14 lakh shares.
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As per a report by Edelweiss Alternative Research, the percentage of anchor shares to outstanding is 5.9 percent in Paytm, or about 3.83 crore shares.
Since its listing on November 18, the stock has logged losses for 14 of 18 sessions. Market experts and analysts blame it on concerns about steep valuations, lack of focus in the business and an uncertain path to profitability.
Foreign brokerage firm Macquarie had initiated an “underperform” on the stock with a target of Rs 1,200.
JM Financial, meanwhile, had initiated with a “sell” rating with a target price of Rs 1,240 based on 55x FY30E EV/EBITDA discounted back to FY24.
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“Paytm faces stiff challenges in its customer acquisition engine, which would slow down its revenue growth in the core payments business while scale-up of its related ecosystem businesses leaves much to be desired,” it said in a recent note.
It expects GMV CAGR of 41.1%, revenue CAGR of 36.1% and GMV/MTU (monthly transacting user) CAGR of 18.2% over FY21-26E for Paytm.
“However, even with our robust growth expectations (which in turn are a function of its ability to fund MTU growth through cashback/discounts), and an EBITDA breakeven by FY27E, we find valuations rich and the path to profitability fraught with high execution risks in context,” the brokerage said.
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Now that the stock is down nearly 30 percent from its listing price of Rs 1,950, is it a good opportunity for investors to buy Or should they wait for a further decline?
Here’s what analysts are saying:
Harsh Patidar, Senior Research Analyst, CapitalVia Global Research
Paytm’s shares have seen selling pressure since the company’s listing due to high valuations. I believe the stock may do well in the long term as I see decent growth in India’s digitalisation and penetration might increase in rural and semi-urban cities. We believe the immediate support is at Rs 1,200-1,250, which is important for the stock to hold. It could touch Rs 1,750-1,850 by the end of 2022.
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Ravi Singhal, Vice Chairman, GCL Securities
The stock is still highly valued at these levels, so I believe only long-term players should hold Paytm for a target of Rs 2,400 in the next two years.
Manoj Dalmia, Founder and Director, Proficient Equities
Paytm has been facing sell-off for the past two weeks, which has worried a lot of investors. We believe those sitting on losses can hold, and sell below Rs 1,287. Those who wish to buy can wait for a green candle at Rs 1,400-1,500 with a stop loss at Rs. 1,287.
Ravi Singh, Vice President & Head of Research, Share India
We believe Paytm could hit Rs 1,100 in the next few trading sessions. Existing investors may hold their positions with a stop loss of Rs 1,150, and fresh buys should be avoided at the current juncture.
Disclaimer: The views and investment tips expressed by experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.?
