Paytm shares fall 8% after Alibaba block deal report

Shares of One97 Communications, the parent company of Paytm, declined as much as 8.8% on Thursday after the company recorded a series of block deals in which around 19.20 million shares changed hands.

The Paytm stock closed the day at ₹542.25 on the BSE, down 6.4%, after newswire Reuters reported that China's Alibaba Group sold a 3.1% stake in the digital payments firm for $125 million via a block deal.

Alibaba, which held a 6.26% stake in Paytm as of September-end, sold the stake at ₹536.95 apiece, the report says.

This comes weeks after the lock-in period for Paytm's pre-IPO investors ended in November 2022. SoftBank Group Corp, one of the biggest shareholders in One97 Communications, had earlier sold a 4.5% stake in the fintech giant through block deals for $200 million.

In its quarterly business update last week, Paytm said it reported sustained growth in payments and loan distribution business by disbursing ₹3,665 crore ($443 million) worth of loans in the month of December, up 330% on a yearly basis. The total disbursements for the three months ended December 2022 stood at ₹9,958 crore, a growth of 357% year-on-year.

The number of loans grew 117% Y-o-Y to 0.37 crore for the month of December, and 137% Y-o-Y to 1.05 crore cumulative loans for the three months ended December 2022.

The payment solutions company also reported consistent growth in merchant payments volume, with the total Gross Merchandise Value (GMV) processed through its platform rising by 38% YoY to ₹3.46 lakh crore ($42 billion) for the quarter ended December 2022. “Our focus over the past few quarters continues to be on payment volumes that generate profitability for us, either through net payments margin or from direct upsell potential,” it said.

The Paytm Super App also witnessed growth in consumer engagement with the average monthly transacting users (MTU) climbing 32% YoY to 8.5 crore during the quarter under review. The fintech major said the number of merchants paying subscriptions for payment devices has reached 0.58 crore as of December 2022, an addition of 0.1 crore devices in Q3 FY23.

One97 Communications, which made a dismal public market debut on November 18, 2021, 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 as against ₹1,086 crore in the same period last year.

Global brokerage JP Morgan has 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. Macquarie Capital Securities had last year cut the target price of One97 Communications to ₹450 per share from ₹700 earlier.