Shares of fintech major Paytm plunged over 3 per cent to hit an all-time low of Rs 728.50. The market cap of the company slipped below Rs 50,000 crore on the BSE.
Currently, the stock is trading 63 per cent lower from its all-time high of Rs 1,961.05. It opened 0.7 per cent lower at Rs 748.20 against the previous close of Rs 753.60 on the BSE.
The stock has been on a downward trend and has tanked over 45 per cent on a year-to-date basis. The shares are trading lower than 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Commenting on the recent sell-off, Ashis Sarangi, a SEBI registered investment advisor at Pickright Technologies, said, “The fundamental reason for the sharp drop in share prices is that the majority of new age companies that are listed on the market are because of huge losses.”
“The goal of these businesses is to make money in the future, not in the short term. We also believe that understanding the business model of new-age enterprises requires time for investors. If you look at stocks like Twitter and LinkedIn, they both corrected after being listed in the United States and came in under the listing price,” he said.
At the current values, only investors with a high-risk appetite can dedicate a portion of their portfolio (2 per cent – 4 per cent) to these companies as there are many alternative stock ideas available now on a better risk-reward basis, he added.
Meanwhile, Kranthi Bathini, equity strategist at WealthMills Securities, told BusinessToday.In, “Post results, the stock is under pressure and volumes are coming down significantly. The institutional interest is very less despite attractive valuations of the stock now.”
He added that the investors are in a wait and watch mode now on these new-age business models. Management guidance with respect to profitability is much crucial for the stock going ahead.
According to a recent report by ICICI Securities, Paytm’s revenue is likely to grow at more than 35 per cent CAGR over FY22-FY24E and more than 25 per cent over FY24-26E which is well above the industry average. The brokerage house is bullish on Paytm and has a target price of Rs 1,352 per share.
“On our target value of Rs 1,352 per share, Paytm is being valued at around 9.5x operating revenue largely at a slight premium to global fintech with a comprehensive offering, in-line with BNPL players and at a discount to the global card network entities. Also, it is to be noted that Paytm revenue is likely to grow at more than 35 per cent CAGR over FY22-FY24E and more than 25 per cent over FY24-26E which is well above the industry average. Our valuations translate to 0.3x price/revenue growth ratio,” the brokerage house said.
Macquarie, which had initiated coverage of the company in November last year with a target price of Rs 1,200, slashed its target to Rs 700 citing profitability concerns.
Vijay Shekhar Sharma-led One 97 Communications had made a tepid debut on November 18 last year. The scrip got listed at a discount of 9.30 per cent at Rs 1,950 on the NSE against the issue price of Rs 2,150 per share.