Shares of Paytm parent fall as much as 19%

Shares of mum or dad One97 Communications plunged as a lot as 19% on Monday, including to its 27% decline on debut on Thursday as retail investors who wager on an inventory achieve continued to dump the inventory whereas home institutional traders stayed away from the counter. The subdued itemizing and continuation of weak buying and selling on Paytm has dented sentiment within the home market, which had been thriving on the sturdy main market, mentioned analysts.

The inventory recouped some losses on the finish, closing at Rs 1,360.30 on Monday, 13% decrease than Thursday’s closing value and 37% decrease than the provide value of Rs 2,150. The corporate’s valuation has declined from Rs 1.4 lakh crore on the provide value to Rs 88,185 crore on Monday.

“Nobody is aware of when the correction will finish in Paytm as there are not any dependable valuation fashions to worth the new-age digital firms,” mentioned Geojit Monetary Companies chief funding strategist VK Vijayakumar. “Although these firms are prone to commerce at a premium to present firms as a result of their progress potential and skill to scale up operations, that does not justify the irregular premia at which they’re buying and selling now.”

In a report launched on One97’s itemizing day, Macquarie had valued the inventory at Rs 1,200, pegging it at 0.5 instances the price-to-sales progress a number of on December 2023 annualised gross sales. In response to Piyush Nagda, head, funding merchandise, Prabhudas Lilladher, Paytm may see shopping for curiosity from establishments and household workplaces at round Rs 1,250-1,300 ranges.

Higher-listed fintech firms can be found with affordable valuations and certainty of progress, mentioned analysts.

Paytm’s FY21 income was Rs 3,281 crore. Bajaj Finserv, a listed fintech firm with a confirmed observe file of steady revenue and progress, posted FY21 income of Rs 63,000 crore and revenue of Rs 4,470 crore. It’s buying and selling at a market cap of Rs 2.72 lakh crore. SBI Playing cards & Cost Companies, with a income of Rs 9,301 crore and revenue of Rs 985 crore in FY21, trades at a market cap of Rs 95,100 crore.

“If we discuss in regards to the future outlook of Paytm, then it’s nonetheless erratic as a result of the market is just not clear about its core enterprise and timing of profitability,” mentioned Santosh Meena, head of analysis, Swastika Funding. “Solely very aggressive traders ought to keep invested within the firm whereas others ought to have a look at exit alternatives at any pullback.”

In response to a Bloomberg report, Vijay Shekhar Sharma, the founder and chief government officer of One97 Communications, in contrast the inventory efficiency to that of Tesla Inc. after the Indian funds startup suffered a brutal first-day plunge.

In a BSE submitting, One97 mentioned its gross merchandise worth (GMV)—or funds made to retailers by way of its platform—jumped 131% to $11.2 billion in October from a yr earlier. The variety of its month-to-month transacting customers (MTUs) grew greater than 35% in October to 63 million from 47 million in the identical month final yr. GMV per MTU elevated to $177 from $104.

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