Paytm
fell nearly 12% to touch new lows of Rs 474.30 apiece before closing the day at Rs 475.55 on the NSE. Shares opened lower and selling intensified after analysts at Macquarie said the entry of Reliance Jio’s Financial Services arm can be a real threat to fintech business models as well as some of the non-bank lenders.
“Among NBFCs/fintech, BAF (Bajaj Finance) and Paytm could be the most at risk,” said Suresh Ganapathy, Macquarie’s India Head of Financials Research, in a client note.
More than 2.38 crore Paytm shares exchanged hands on the BSE and NSE on Tuesday, 6.6 times the average daily volume on both exchanges in the last one month.
This rout took the company’s market capitalisation to below $4 billion — the valuation at which Paytm raised money from Chinese internet major Alibaba and its affiliate Ant Financial in 2015. At Tuesday’s closing price, the company’s market cap stood at Rs 30,971.21 crore, or $3.79 billion. In November, 2021, Paytm went public with an issue price of Rs 2,150 per share. The stock has plummeted nearly 78% from its issue price. Then, Paytm’s IPO was India’s biggest public offering.
“While it is too early to take understand the exact customer segments and target markets that Jio Financial plans to cater to, it seems clear that it will be focused on consumer and merchant lending, which is the mainstay of NBFCs like Bajaj Finance and fintechs like Paytm,” the Macquarie note read.
Discover the stories of your interest
India’s most valuable company Reliance Industries last month said it is creating a financial services unit to focus on consumer businesses. Jio Financial Services will be demerged and listed as a separate entity.
Paytm’s slump rubbed off on shares of other new-age businesses too. Nykaa shares fell 4.66% amid heavy volumes and Zomato fell 0.6%.
Over 5.33 crore Nykaa shares changed hands against a combined daily average volume of 2.31 crore in the past one month that saw several large stake sales by pre-IPO investors liquidating their shares after the end of one-year lock-in period.
On Tuesday,
Lighthouse India sold Nykaa shares worth Rs 355 crore via a block deal. TPG Capital sold shares worth Rs 1,000 crore last week as did NRI investor Mala Gopal Gaonkar.
On November 15, the one-year lock-in on roughly 86% of Paytm’s outstanding shares expired. Following this, one of Paytm’s early investors — Japanese conglomerate SoftBank Group —
sold 29 million shares of One 97 Communications on Thursday, through a block deal for about Rs 1,631 crore at a price of Rs 555.67 apiece.
“The selling pressure by pre-IPO investors of new age companies will not abate soon,” said Siddharth Khemka, Vice President and Head – Retail Research, Motilal Oswal Financial Services. “Investors, especially retail investors who are typically trend followers, should not rush to buy the shares of these new age companies immediately.”
Khemka said new age businesses are not going to turn to profit overnight and will offer plenty of opportunities for investment.
“Not just in India, but world over, technology stocks have fallen out of favor. Investors have lost patience and tweaked their outlook to reduce equity exposure in times of rising interest rates, tightening liquidity, demand slowdown and uncertain macroeconomic situation,” said Khemka.
Earlier this month, One 97 Communications reported a net loss of Rs 571.5 crore for the July-September quarter, widening from Rs 473.5 crore in the same period last year, even as its revenue from operations jumped 76% in the quarter ended September 30 to Rs 1,914 crore, mainly on account of a surge in loan disbursals. The company has set a target to achieve operational profitability by September 2023.
For all the latest Technology News Click Here
