November 29, 2021

The World Stock Markets Tips & Targets, News, Views & Updates

The World Stock Markets Tips & Targets, News, Views & Updates

Paytm stays in green for second straight day with over 30% rise from record lows

Shares of One97 Communications, the parent company of Paytm, continued to gain sharply on November 24, after closing more than 9 percent up in the previous session.

The recovery comes as a major relief to investors who became jittery after a disappointing debut by the payments giant on the bourses on November 18. After listing at a 9 percent discount to the issue price of Rs 2,150, its shares closed 27 percent lower at Rs 1,564 on the first day of trade, spooking investors as well as start-ups that plan to go public soon.

Also Read: Why the flop listing may not be such a bad thing

The stock fell more than 13 percent and hit an all-time low of Rs 1,271.25 on the second day on the bourse, erasing over Rs 52,000 crore of its market capitalisation in two days.

Many experts and market participants had written off Paytm as an overvalued stock that should be avoided at all costs, especially on the back of uncertainty over its business model, path to profitability, and rising competition in the space.

Analysts continue to believe the stock is overvalued, with Macquarie maintaining a target of Rs 1,200, citing lack of focus in the business.

The shares of the company rebounded on Tuesday in a volatile market and hit a high of Rs 1,525 on the BSE.

Also Read: Paytm IPO and Beyond | Reality check on the listing of new-age companies

On Wednesday, the shares extended those gains and, at 11:35am, they were up 11 percent at Rs 1,662.10. The stock hit a high of Rs 1,684, which is almost 80 percent of its issue price of Rs 2,150. Its market cap currently stands at Rs 1.07 lakh crore.

“Paytm is finding buying interest at lower levels following a sharp fall after listing. However, Rs 1,700 could act as a supply point and it may remain in the Rs 1,400-1,700 band until the market identifies its right value,” said Santosh Meena,  Head of Research at Swastika Investmart.

“If it manages to sustain above Rs 1,700 level, then it may see further buying interest,” he said, adding that Paytm’s massive customer base and strong brand positioning are the company’s biggest strengths. However, he believes there is no clear moat in the business along with a low entry barrier.

On November 21, the company reported a positive business update, saying that it recorded a 418 percent year-on-year growth in the value of loans disbursed in October.

Also Read: BharatPe’s Ashneer Grover hits out at Paytm, says founder answerable for investors’ money

“October saw continued increase in adoption across our different financial services products. The lending business continued to show very strong growth as a result of rapid scale-up of all of our lending products, including Postpaid, consumer loans, and merchant loans,” Paytm said.

The One 97 Communications Board of Directors will meet on November 27 to consider and approve the quarterly financial results. It is expected to subsequently release the July-September earnings numbers the same day.

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