Paytm shares fell 47% from the issue price. Should you start buying now?
Shares of digital payments and financial services firm Paytm have almost halved from the issue price of its initial public offering (IPO) since its dismal listing and a series of bearish opinions, sharply underperforming the market. Nifty and trading at a lower price than its global and private peers.
The stock is trading today down more than 1% on BSE despite a more than 4-fold jump in loan disbursements during the period October-December 2021. The Paytm share price has fallen by more than 47% compared to its issue price of ??2,150 each, and experts see the pressure to continue in the short term.
“Paytm stocks will continue to be under pressure in the short term as ‘long term’ national institutions continue to exit their benchmark allocations within 2 months of listing. Management’s current approach of leaving business strategy to the imagination of investors will only weaken the share price further, ”said Abhay Agarwal, Founder and Fund Manager at Piper Serica, SEBI Regd. PMS.
The company’s gross value of goods (GMV) more than doubled to ??2.5 lakh crore in October-December 2021 compared to ??1.12 lakh crore it recorded in the corresponding quarter a year ago.
Ravi Singh, Vice President and Head of Research, Share India Securities expects Paytm stock to see further decline and hit levels of ??1050-1000 in close terms. He advised investors to remain cautious about taking new positions for now.
One 97 Communications Ltd, the parent company of Paytm, raised $ 2.5 billion when it went public, but a 27% drop when it debuted on November 18 made it one of the worst initial performances in the world. ‘a big tech company since the dot-com bubble era in the late 1990s.
“Paytm’s payments business represents around 70% of revenue, which will be at risk if the regulations change. Moreover, its entry into the insurance sectors has been rejected by regulators. The stock is trading at around 17 times FY 23 sales, which looks overvalued. We expect a small retracement to ??1336.35 if a buy occurs and lower ??724.6 ”, said Manoj Dalmia, Founder and Director of Proficient Equities Private Limited.
The opinions and recommendations expressed above are those of individual analysts or brokerage firms, not Mint.
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