Paytm continues roller coaster ride; shares tank 8% ahead of Q2 earnings

Amid the ongoing correction, the shares of Paytm (listed as One 97 Communications) declined nearly 8 per cent to hit an intraday low of Rs 1,661.10 on the Bombay Stock Exchange (BSE) ahead of the earnings for the quarter ended September 2021.
 
The stock has been on a roller coaster ride since the company made its debut on Dalal Street. It opened 1 per cent lower at Rs 1,777.00 against the previous close of Rs 1,796.55. The market cap of the firm fell to Rs 1,12,809 crore on BSE.
 
On Wednesday, the shares of fintech giant Paytm (listed as One 97 Communications) rose 20 per cent to hit an intraday high of Rs 1,790 on the BSE. The market cap of the firm rose to Rs 1,13,652.10 crore. It tanked 19 per cent to hit an intraday low of Rs 1,271 on Monday.
 
"Paytm saw a weak listing on account of expensive valuations and continues loss in past years. In upcoming quarters, the company is expected to post-loss as its strategy is to grow consumer base, merchant base, advanced technology platform and rapidly scale up for other segments. Paytm will face tough competition and which will impact its market share. Long-term investors should avoid the stock and wait for better prices," said Akhil Rathi, vice president advisory, Marwadi Shares and Finance.
 
"Existing investors can hold the stock for now and the high-risk appetite investors can take a position in a staggered manner," Kranthi Bathini, equity strategist at WealthMills Securities, told BusinessToday.in.
 
On Sunday, the financial services firm announced that it saw a 418 per cent year-on-year (YoY) increase in value of loans disbursed through it in October at Rs 627 crore, while the number of loans disbursed grew 472 per cent year-on-year (YoY) to 13 lakh.
 
Brokerage firm Macquarie has an 'underperform' rating on the stock with a target price of Rs 1,200 per share. "Paytm's valuation, at around 26x FY23E Price to Sales (P/S), is expensive especially when profitability remains elusive for a long time," it said in a note.
 
One97 Communications, the parent firm of Vijay Shekhar Sharma-owned Paytm, had one of the worst debuts in stock market history as the stock lost more than one-fourth of its value on the first day. This was in sharp contrast to some of the recent stock market debuts by biggies from the start-up world.
 
Paytm initiated its journey as a public company with a 27 per cent fall over its IPO (initial public offering) price on November 18. The scrip 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.
 
However, it managed to cross the milestone of Rs 1 lakh crore market capitalisation during its market debut. The digital payments firm reached a market cap of Rs 1.19 lakh crore on the BSE during its tepid market listing.