Investors were concerned over the company valuations after foreign brokerage Macquarie, ahead of Paytm’s listing last week, suggested a target of Rs 1,200 for the stock. Following it, a few other brokerages also sounded caution, given the sentiment on the counter.
Paytm stock traded at EV to sales of 40.30 times compared with 15.69 times Visa’s, 15.79 times Mastercard’s and 7.81 times Paypal’s. On Price to sales basis, it traded at 33.53 times compared with 16.22 times Visa’s, 18.93 times Mastercard’s and 9.25 times Paypal’s.
To be noted, there were not many brokerages with an ‘avoid’ call on the IPO.
On Monday, the stock fell 10.36 per cent to hit a low of Rs 1,402 on BSE. With this, the stock has eroded 35 per cent of investor wealth in two days. And even the positive business update could not stop the stock from falling.
Paytm in a BSE filing said: “The October 2021 month 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.”
“Through its financial institution partners, the company issued 1.3 million loans in October worth $84 million. This is an increase of 472 per cent in the number of loans and 418 per cent in value,” the company said.
A Business Standard report suggested Sebi is planning to question the investment banks that handled Paytm’s initial public offering (IPO), the country’s largest-ever, over the listing debacle. The capital markets regulator will seek their views on why the stock tanked on listing day, the media report suggested.
Macquarie said Paytm’s business model lacked focus and direction, calling the company a ‘cash guzzler’.
“I would not even be comfortable at less than 50 per cent discount to the current price because I do not really see a path to Paytm’s market domination and the kind of dreams that are being propelled,” said Anurag Singh of Ansid Capital.
Meanwhile, Piyush Nagda, head- investment product at Prabhudas Lilladher told ET that Paytm share prices will remain subdued in the short to medium term as IPO investors will try to exit the stock at every possible rise, and new investors won’t touch it till sentiment changes.
