Shares of Paytm’s parent company, One97 Communications, fell around 3% on Tuesday to an all-time low of ₹728.50 in intraday trading on BSE.
The stock has fallen over 66% from its issue price of ₹2,150 in less than four months.
Shares of the digital payments company ended the day at ₹737.85 apiece on BSE, mirroring a selloff seen in other new-era tech stocks. In comparison, the broader Indian markets closed higher, driven by gains in real estate, IT and pharmaceuticals.
The stock is now trading closer to Macquarie’s revised target of ₹700. The brokerage had last month cut its target price of Paytm citing profitability issues and mounting losses.
The Vijay Shekhar Sharma-led company had reported a massive ₹780 crore loss in the third quarter, driven by a high stock option cost of ₹390 crore.
Prior to its issuance, the company had issued around 28 million ESOPs, which is expected to result in an annual recurring expense of around ₹1,600 crore, according to Macquarie’s estimates.
The brokerage has met its price targets for One97 Communications since making its dismal public market debut on November 18, 2020.
On the day Paytm went public, Suresh Ganapathy, who follows the stock at Macquarie Capital Securities, was blunt in his initial cover note titled “Too many fingers in too many pies”.
The analyst said that branching out into multiple lines of business prevents Paytm from being a category leader in any business except wallets, which becomes inconsequential given the meteoric rise of UPI as an alternative to digital payments.
Macquarie also criticized Paytm’s lending activities. “The loan distribution business is still undersized, with the company only distributing 39,000 merchant loans, which represents only 2% of total loans by volume,” the analyst had said.
One97 Communications, which launched the country’s largest initial public offering (IPO) last year, has witnessed a sell-off by flagship investors such as Blackrock, the regime’s investment office. Canada Pensions and Singapore GIC since the lockdown expired on December 15, 2021.
On Feb. 21, ICICI Securities launched a hedge on the shares of the digital payments major with a “Buy” rating and a target price of ₹1,352.
Paytm calls for quite a different and distinct assessment and valuation, especially given management’s “high growth aspirations requiring significant capital investment” and cash burn, rapidly changing business model, a highly competitive landscape with low switching cost and deep-pocketed top players becoming aggressive and regulatory. uncertainties, the national brokerage had said. The report estimated Paytm’s intrinsic business value at ₹94,000 crore.