Paytm‘s share price fell 9% on Thursday to Rs 546 on BSE. The fall comes a day after reports surfaced that Softbank announced a large stake sale in the homegrown financial services app’s parent, One 97 Communications via a block deal. Investors are rushing to exit their holding in the digital payments platform, as the price of stock plummets below Rs 560. The sale of 2.9 crore shares, within the price band of Rs 555-601, is to be completed on Thursday. Softbank is conducting a series of divestments, after its unit Vision Fund booked almost $50 billion in losses over the period of six months.
The news about the sale came after the lock-in period for Paytm’s IPO investors ended. One 97 Communications stock ended 4% on Wednesday at Rs 601, after touching a new 5-month low intraday. Paytm’s issue price was set at Rs 2,150, but the stock is over 72% under.
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In Q2FY23, Paytm reported a 76% on-year increase in their revenue, at Rs 1,914 Cr. However, the company’s net loss widened 21% to Rs 571.5 crore, from Rs 473.5 crore in the previous year. Dolat Capital remains positive on Paytm, as they see a boost in earnings growth on the back of a favourable business mix. They also expect payment processing optimization to slow down going forward, the analysts also expect improved revenue mix and employee cost to act as key growth lever for the Vijay Shekhar Sharma-led firm.
Despite Paytm shares’ underperformance since its listing, analysts at ICICI Securities are bullish on the fintech stock, as they believe the company can achieve an operating profit before Q2FY24. “Steady improvement in margin profile with better monetisation suggests achievement of operating profitability (positive EBITDA before ESOP cost) ahead of its guided timeline of Q2FY24,” they said in a recent report. The brokerage maintains a Buy call on the stock, with a target price of Rs 1285, implying a potential rally of 113.65% from Wednesday’s closing price of Rs 601.45.
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