Paytm shares crash 10% to hit new record low

Shares of Paytm parent One97 Communications tumbled to a new all-time low since listing as the selloff led by pre-IPO investors continued.

The digital payments company's stock sank 10% on Tuesday to ₹479.65 apiece on the National Stock Exchange (NSE). Shares of the fintech firm have plunged 78% from the IPO issue price of ₹2,150.

The Vijay Shekhar Sharma-led company's market capitalisation has fallen to ₹31,300 crore today compared with ₹1.15 lakh crore a year ago.

The slide in Paytm's share price comes days after the lock-in period for its pre-IPO investors ended last week. SoftBank Group Corp, one of the biggest shareholders in One97 Communications, sold a 4.5% stake in the fintech giant through block deals for $200 million.

Meanwhile, Macquarie in a note on Monday, said Jio Financial Services could pose a risk to fintech businesses in India. "Jio Financial Services will have a large balance sheet, not be asset-light and eventually manufacture most product offerings, giving it a significant competitive advantage… It can be a real threat to fintech business models as well as NBFCs. Jio Financial not only can offer attractive rates in merchant lending and digital unsecured lending markets, but also be reasonably competitive in the secured lending market eventually," it said.

In March, Macquarie Capital Securities had cut the target price of One97 Communications to ₹450 per share from ₹700 it predicted in February 2022. The brokerage has been bang on with its price targets for One97 Communications ever since the company made a dismal public market debut on November 18, 2021.

One97 Communications, which reported second quarter earnings earlier this month, saw its consolidated net loss widen to ₹571 crore for the quarter ended September 30, 2022, as against ₹472 crore in the same period last year.

Revenue from operations rose 76% to ₹1,914 crore against ₹1,086 crore in the same period last year. The growth in revenue was driven by accelerated device deployments, and momentum in commerce and cloud and growth in Paytm’s advertising, resumption of ticketing volumes, and credit cards among others, the company said.

Segment-wise, revenue from payment services to consumers business grew 55% YoY at ₹549 crore whereas the revenue from payment services to merchants surged 56% YoY at ₹624 crore. The company's net payment margin surged 15% QoQ at ₹443 crore, led by monetisation and improvement in payment processing charges. Revenue from financial services, which accounts for 18% of its total revenue, zoomed 293% YoY to ₹349 crore, driven by strong sourcing and collection revenues.

Global brokerage JP Morgan recently assigned an 'Overweight' rating to the stock, and raised the target price to ₹1,100, while ICICI Securities has reiterated a 'Buy' rating with a share target price of ₹1,285.