Paytm shares down 47% from issue price. Should you start buying now?
Premium- Paytm shares trading over 1% lower today on the BSE despite recording over 4-fold jump in loan disbursals during Q3
Shares of digital payments and financial services firm Paytm have nearly halved from its initial public offering (IPO) issue price since its dismal listing and a spate of bearish views, underperforming the Nifty sharply and trading at a discount to global and private peers.
The stock is trading over 1% lower today on the BSE despite recording over 4-fold jump in loan disbursals during the October-December 2021 period. The gross merchandise value (GMV) of the company also more than doubled during the quarter-ended December. Paytm share price has plummeted over 47% from its issue price of ₹2,150 apiece, and experts see the pressure to continue in near-term.
“Paytm shares will continue to be under pressure in the near term as ‘long-term’ domestic institutions continue to exit their anchor allocations within 2 months of listing. The sentiment is damaged by the new ₹900 target price by an international research house," said Abhay Agarwal, Founder and fund manager at Piper Serica, SEBI Regd. PMS.
One 97 Communications Ltd, Paytm’s parent company, raised $2.5 billion in its public issue, but a 27% plunge in its 18 November debut made it one of the worst initial showings by a major technology firm since the dot-com bubble era of the late 1990s.
“It is difficult to say where the stock will find a bottom but it may not be far off from here. We believe that the company has done a solid job of creating a national level brand. However, now it needs to convince investors that it will lead to long-term value creation. The company needs to articulate a clear path to profitability since it is in a very competitive space with fragmented market shares. The current approach of the management of leaving the business strategy to the imagination of investors is only going to further dent the stock price," Agarwal added.
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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