Paytm Touches New Record Low At INR 452; Competition From Jio Financial Services Heightens Risk

SUMMARY

Paytm shares were down about 4% at INR 459.55 by 2 pm IST today

In a note earlier this week, Macquarie pointed out that Paytm could face risks from the entry of Jio Financial Services

Paytm shares, which were already showing a downward trend since the last week after the lock-in for its pre-IPO investors expired, fell in straight three sessions this week

Shares of fintech giant Paytm touched a new record low at INR 452 after falling as much as over 5% on the BSE on Wednesday (November 23). The stock continued to get battered after the lock-in expiry and intensifying competition from Jio Financial Services.

In a note earlier this week, Macquarie pointed out that Paytm could face risks from the entry of Jio Financial Services. In fact, Paytm and Bajaj Finance are likely to face more risks than other NBFCs/fintech.

“Jio Financial Services will have a large balance sheet, not be asset-light and eventually manufacture most product offerings, giving it a significant competitive advantage… It can be a real threat to fintech business models as well as NBFCs. Jio Financial not only can offer attractive rates in merchant lending and digital unsecured lending mark,” the brokerage noted.

Paytm shares, which were already showing a downward trend since the last week after the lock-in for its pre-IPO investors expired, fell in straight three sessions this week. On Tuesday, Paytm shares had touched their record low at INR 476.65 on the BSE, plunging as much as 11%.

Paytm shares were down about 4% at INR 459.55 by 2 pm IST today.

“Paytm shares look weak on weekly timeframe and might continue its downward journey to INR 292, investors can avoid buying this stock as they might suffer further losses,” said Manoj Kumar Dalmia, founder and director of Proficient Equities.

Meanwhile, Ravi Singal, CEO of GCL suggested that investors should currently wait. “We believe it can test 350 levels after some consolidation. It is possible to accumulate near these levels for the long term,” he said.

After Paytm’s lock-in period last week, one of its major investors SoftBank sold 4.5% of its stake in the company worth about $200 Mn in a bulk deal.

Paytm also reported its Q2 FY23 results earlier this month where it posted a widened year-on-year loss of INR 571 Cr. However, despite that, brokerages have largely remained bullish on Paytm.