There has been pressure since the listing in the shares of Paytm. The stock has lost 72 per cent from its issue price.
Paytm Stock on New Record Low: The decline in the shares of One 97 Communications Ltd (Paytm) is not taking its name to stop. Today i.e. even in the business of March 15, the company’s stock fell by about 12 percent to a price of Rs 595. This is the new all time low for the stock. Before this, on Monday, March 14, the stock had lost 12 percent in intraday. On Monday it closed at Rs 675. The stock has lost 72 per cent from its issue price. By the way, there has been pressure in the shares of Paytm since the listing. But the recent negative trigger is that RBI has taken a big action on Paytm Payments Bank and has banned the addition of new customers with immediate effect. After this, the market sentiment regarding the stock has worsened further.
Huge loss to those who put money in IPO
Paytm’s IPO came only last year. It has been in the most popular IPO of the year 2021. This was the biggest IPO ever, with an issue size of Rs 18,300 crore. The company had fixed an upper price band of Rs 2150 under the issue. But even after being the biggest and popular IPO, it disappointed the investors. The company’s stock was listed in the market on 18 November 2021.
It was listed at Rs 1955 as against the issue price of Rs 2150, which is a record high. On the listing day, it fell 27 percent and closed at Rs 1564. The stock is currently trading at Rs 595, which is 72 per cent lower than the issue price and 70 per cent lower than the record high after the listing. Experts believe that one of the reasons behind this decline is its high valuation. At the same time, nothing can be said about how long the company will be profitable.
The company made huge losses in the December quarter
Payment company Paytm’s loss has increased in the December quarter of FY 2022. The company has incurred a loss of Rs 778 crore during this period. Whereas in the quarter of FY 2021, the company’s loss was Rs 532 crore. However, Paytm got a good increase in income from work. The company’s revenue increased by 89 percent to Rs 1456 crore. The main drivers of revenue growth were merchant payments through MDR instruments, new device subscriptions and loan disbursement. In the same quarter last year, the revenue of Paytm was Rs 772 crore.
Negative View of Brokerage
Brokerage house Macquarie has maintained an underperformer rating on the stock. The brokerage house says that RBI has forbidden the payments bank to add new customers. Although the payment bank’s customer base is already huge, it will not affect the company’s business much. But there will be an impact on brand and customer loyalty.
Brokerage house ICICI Securities says that after the RBI ban, the company will have to make additional efforts to offset the adverse impact and increase the engagement of existing users. Now, moderation is expected in the onboarding of new users and may have a negative impact on revenue. Although the brokerage has kept the view of buying in the stock, but has reduced the target to Rs 1285.
(Disclaimer: The stock of the company is advised by the brokerage house. These are not the personal views of The Financial Express. Markets are risky, so take expert opinion before investing.)
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