- Date : 24/11/2021
- Read: 3 mins
Analysts are looking at Rs 1200 as a fair value for Paytm stock.
The stock of India’s fintech unicorn Paytm's parent company, One97 Communications, plunged by almost 40% within two days of listing compared to its issue price of Rs 2150. The weak debut has left hopeful investors in a tizzy as other IPOs such as Nykaa and Policybazaar listed around the same time at handsome premiums.
What is the present situation of Paytm's stock?
In a bid to arrest the slide of the stock price, Paytm disclosed reassuring financial details for October ’21, which includes critical performance data around the Diwali festival. Paytm's Gross Merchandise Value (GMV) grew by 131% for the month to Rs 832 billion, and the loan disbursal segment grew by over 400% to Rs 6.27 billion.
Driven by the positive data, the stock has seen some positive traction, recouping almost 10% on Tuesday, November 23.
Related: Everything You Need To Know About The Paytm IPO
So what is the way forward for Paytm's stock investors?
Should investors hold or exit, or is it a good opportunity to add the stock at a discount? Here is what different brokerage and investment firms have to say:
As per a report by Macquarie Capital Securities, Paytm seems to be overvalued with no profitability in sight for the long term. Macquarie’s MGRS (governance and risk scoring) system places Paytm below the sector median and issued a target price of Rs 1200.
‘Dabbling in multiple business lines inhibits Paytm from being a category leader in any business except wallets, which are becoming inconsequential with the meteoric rise in UPI payments. Competition and regulation will drive down unit economics and/or growth prospects in the medium term in our view. Therefore, question its ability to achieve scale with profitability. We value the stock using a 0.5 times PSG multiple on December 2023 annualised sales to arrive at our target price of Rs 1,200, implying a 44% downside. The key game-changer could be an ability to monetise UPI, which could completely swing the investment case.’ Specified analysts Suresh Ganapathy and Param Subramanian who authored the report.
Related: A Woman's Guide To Investing In IPOs
Deven Choksi, strategist at KRChoksey Investment Managers believes the price may not go down further considering 87% of the issue was subscribed by institutional investors, who may not be keen to offload their stake as yet.
Ravi Singhal of GCL Securities advises existing shareholders to look for a bounce-back and cash-out while new investors should avoid taking an active position.
Meanwhile, Paytm's CEO Vijay Shekhar Sharma is unfazed by the current sentiment and believes the downwind is not an indicator of value. "We are in it for the long haul. We’ll put our heads down and execute," he said.
The stock of India’s fintech unicorn Paytm's parent company, One97 Communications, plunged by almost 40% within two days of listing compared to its issue price of Rs 2150. The weak debut has left hopeful investors in a tizzy as other IPOs such as Nykaa and Policybazaar listed around the same time at handsome premiums.
What is the present situation of Paytm's stock?
In a bid to arrest the slide of the stock price, Paytm disclosed reassuring financial details for October ’21, which includes critical performance data around the Diwali festival. Paytm's Gross Merchandise Value (GMV) grew by 131% for the month to Rs 832 billion, and the loan disbursal segment grew by over 400% to Rs 6.27 billion.
Driven by the positive data, the stock has seen some positive traction, recouping almost 10% on Tuesday, November 23.
Related: Everything You Need To Know About The Paytm IPO
So what is the way forward for Paytm's stock investors?
Should investors hold or exit, or is it a good opportunity to add the stock at a discount? Here is what different brokerage and investment firms have to say:
As per a report by Macquarie Capital Securities, Paytm seems to be overvalued with no profitability in sight for the long term. Macquarie’s MGRS (governance and risk scoring) system places Paytm below the sector median and issued a target price of Rs 1200.
‘Dabbling in multiple business lines inhibits Paytm from being a category leader in any business except wallets, which are becoming inconsequential with the meteoric rise in UPI payments. Competition and regulation will drive down unit economics and/or growth prospects in the medium term in our view. Therefore, question its ability to achieve scale with profitability. We value the stock using a 0.5 times PSG multiple on December 2023 annualised sales to arrive at our target price of Rs 1,200, implying a 44% downside. The key game-changer could be an ability to monetise UPI, which could completely swing the investment case.’ Specified analysts Suresh Ganapathy and Param Subramanian who authored the report.
Related: A Woman's Guide To Investing In IPOs
Deven Choksi, strategist at KRChoksey Investment Managers believes the price may not go down further considering 87% of the issue was subscribed by institutional investors, who may not be keen to offload their stake as yet.
Ravi Singhal of GCL Securities advises existing shareholders to look for a bounce-back and cash-out while new investors should avoid taking an active position.
Meanwhile, Paytm's CEO Vijay Shekhar Sharma is unfazed by the current sentiment and believes the downwind is not an indicator of value. "We are in it for the long haul. We’ll put our heads down and execute," he said.
