In a block deal, 3.4% equity or 2.1 crore shares of Paytm’s parent company One97 Communications changed hands today in which Chinese multinational Alibaba sold its entire stake, ANI reported. Following the block deal, the stock cracked 9% to day’s low at Rs 646.
Alibaba had a 6.26% stake in Paytm at the end of the December quarter and had sold around 3% of equity through the open market route in January.
Alibaba has been offloading stakes in listed new-age technology companies in India amid a sharp erosion in the value of its investments. The Chinese multinational had offloaded a 3% stake in online food delivery aggregator Zomato earlier in November.
Today’s block deal by Alibaba punctured the rally seen in Paytm during the last few days after it announced operating profitability in the December quarter.
The new-age company’s Q3 net loss had narrowed to Rs 392 crore from Rs 779 crore a year ago. “With our focus on growth and keeping a tight vigil on operational risk and compliances, I am very confident that we will soon achieve our next milestone of becoming a free cash flow generating company,” Paytm CEO Vijay Shekhar Sharma had said after the announcement of the quarterly results last week.
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Shares of Paytm, which had announced an Rs 850 crore-share buyback programme last month, have so far plunged around 70% from its IPO issue price of Rs 2,150. In the last five days, however, the stock is up around 19%.Paytm now has 8 buy recommendations out of 11 analysts covering the stock with an average target price of Rs 915, which signals an upside potential of over 34%, Trendlyne data shows.
The quarterly earnings report card even managed to impress Macquarie, known for its harsh views on Paytm’s outlook. The global brokerage firm gave a double upgrade to the stock and raised its target price by 80% to Rs 800.
“Our view at Rs 2,150 is different from our view when the stock is priced around Rs 600. Since our last target price cut, Paytm has positively surprised on the distribution of financial services revenue by a wide margin and has also managed to control overall expenses and charges,” Macquarie analysts Suresh Ganapathy and Param Subramanian said.
Among other global brokerages, Goldman Sachs gave a price target of Rs 1,150, Citi Rs 1,061, and BofA Securities Rs 730.
In its monthly business update for January, Paytm said its average monthly transacting users during the month rose 29% YoY to 89 million. “We continue to strengthen our leadership in offline payments, with 6.1 million merchants now paying a subscription for payment devices, an increase of 0.3 million in January 2023,” it said.
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