Paytm Shares Extend Decline To 10% Despite Q2 Business Update

Shares of One97 Communications Ltd., the operator of digital payments platform Paytm, slumped as much as 10% on its second trading day after marking one of the worst-ever debuts by a major technology company on Thursday.

The stock had plunged 27% below its issue price after the biggest India initial public offer. Over the weekend, the company provided a business update for the quarter ended September and the month of October.

The company saw its gross merchandise value double in the July-September quarter, with the number and value of loans channeled through its system also rising sharply.

According to the update:

• GMV was at Rs 1.95 lakh crore in the quarter, up 107% year-on-year.

• GMV was at Rs 83,200 crore in October, up 131% year-on-year.

• Monthly transacting users—with at least one successful transaction in a month—were at 6.3 crore in October, up 35% year-on-year.

• Monthly GMV/MTU, which according to Paytm reflects customer and merchant engagement, was up 55% in the second quarter. It rose 71% in October.

• Total number of devices employed stood at 14 lakh as of October.

• Over 28 lakh partner loans disbursed through network in the quarter ended September, up 714%.

• Value of loans disbursed at Rs 1,260 crore in the quarter compared with Rs 210 crore a year ago.

The take rate, or the percentage of this gross merchandise value that Paytm records as its revenue, was not disclosed in the update.

"Our strong operating performance continued in the month of October 2021, with increasing numbers of consumers and merchants transacting on our ecosystem, increasing frequency of transactions and increasing adoption of our different products and services," the release said.

Ahead of Paytm's market debut, Macquarie had initiated coverage on the stock with an 'underperform' rating and a target price of Rs 1,200—40% below its issue price. The company is a "cash guzzler" and achieving scale with profitability is going to be a big challenge, Macquarie had said.

Shares of Paytm's parent fell to Rs 1,400 apiece on the NSE, down as much as 10.3%, early on Monday. The stock is trading nearly 35% below its IPO price of Rs 2,150.