Paytm Shares Recover 29% In 2 Days, Market Cap Reaches Above INR 1 Lakh Cr

Shares of One97 Communications, the parent company of Paytm, have recovered nearly 29% in the past two trading sessions after falling to an all-time low levels on Monday.

Analysts said that investors bought the shares at low prices, thereby resorting to value or bargain buying.

“Several analysts and reports had suggested that INR 1,200 – INR 1,300 is going to be a level where the stock might take support. People who probably did not subscribe to the IPO, and were waiting for the correction, found the stock price as a ‘value buy’ after the two days of fall,”  said Gaurav Garg, head of research at Capitalvia Global Research Ltd.

Shares of the company declined as much as 40% from the issue price of INR 2,150 to touch all-time low of INR 1,271.25 on Monday.

On Wednesday, the share price of the fintech giant closed on the BSE at INR 1,753.15, higher by INR 258.20 or 17.27% from its previous close.

Garg was of the view that the stock price is likely to stabilise in the range of INR 1,600 – INR 1,750 in the short term.

“From there it will depend upon performance and how the company comes up with various forms of future plans,” he added.

Noting that the biggest strength for Paytm is its large customer base along with strong brand positioning, Santosh Meena, head of research, Swastika Investmart said, “The market will watch how Paytm will use its strengths to enter into new businesses or create a moat and if it manages to emerge as a leader in a particular business then we can expect buying interest from lower levels otherwise it may take many years to reach its peak valuations.”

With the recovery in share prices, its market capitalisation has increased to INR 1.13 Lakh Cr ($15.27 Bn).

The recovery in share prices bodes well for the investors as the stock was on a freefall for the first two days of trading on the exchanges post a weak listing on November 18. Though it saw an uptick in the past two sessions, it is still considerably low compared to the issue price.

In a regulatory filing on Sunday, Paytm said that it recorded a 131% rise in its gross merchandise value (GMV) in October, at around INR 83,200 Cr ($11.2 Bn).

During the same period last year, the company’s GMV stood at INR 36,000 Cr.

On the lending business, the filing said that the segment 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.

Although running into losses, Paytm witnessed a 62% growth in its revenue from operations during Q1 FY22 at INR 890.8 Cr, backed by strong growth from payment and financial services. Its net loss for the quarter increased 34% to INR 381.9 Cr, from INR 284.4 Cr during the corresponding quarter of FY21.

The board of directors of the company will meet on Saturday, November 27 to consider and approve the financial results of the company for the quarter and half year ended on September 30, 2021.

Founded by Vijay Shekhar Sharma in 2000, One97 Communications began its journey as a value-added service provider. It evolved over the years with different fintech solutions to become an online mobile payments firm.

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