Paytm share tanks; co says business fundamentals robust
The parent company of fintech major Paytm has told BSE that its business fundamentals remain robust and there is no information that may have an untoward effect on its share price. The clarification comes as the share price of the company continued to see sharp declines, reaching a new all time low of ₹536.20.
The exchange had sought clarification from the Vijay Shekhar Sharma-led company on Tuesday over the sharp price movement to ensure that investors have the latest relevant information and their interests are protected.
In a response filed early on Wednesday to BSE, Paytm said “as on date, there is no information/announcement, which in our opinion may have a bearing on the price/volume behaviour in the scrip of the company and which is yet not disclosed to the stock exchanges.”
“The company would also like to point out the business fundamentals remain robust as demonstrated in our last earning release dated February 04, 2022,” it further added.
Paytm reiterated that it is committed to conveying any price sensitive information to the exchanges within the stipulated timeline.
On Tuesday, the Paytm share price dipped to ₹541, before closing at ₹543.90, down 3.8%. The stock opened at ₹550.20 on Wednesday, reaching an intraday high of ₹562 in early trade, before taking a dip to reach a new low. At the time of reporting the Paytm share was trading at ₹540.80, down 3.10 points or 0.57%. The market capitalisation of the company stood at ₹35,072.19 crore.
The sharp decline in Paytm shares comes close on the heels of Macquarie Capital Securities cutting the target price of One97 Communications scrip to ₹450, 36% down from ₹700 it predicted last month. The foreign brokerage retained its “underperform” rating on the stock, saying its valuation for the digital payments major is based on the valuation of global fintech firms.
The price targets for Suresh Ganapathy, who tracks the One97 Communications stock at Macquarie, have been accurate ever since the company made a dismal public market debut on November 18, 2021.
"We believe, to gain scale and size, fintechs need to go beyond distribution and lend, for which they need licences. With the RBI recently raising issues with Paytm Payments Bank and Chinese ownership being 25% or more, we believe the probability of Paytm getting a banking licence is significantly lower now, thereby impeding its ability to lend," the analyst said.
Ganapathy, however, didn't change his earnings or revenue estimates for Paytm.
The average 12-month price target among nine analysts covering Paytm is ₹1,203, according to Bloomberg data.