Shares of Paytm (listed as One 97 Communications) plunged 4 per cent to hit an all-time low of Rs 952.95 on BSE on Friday. The stock has been under tremendous selling pressure from past few trading sessions.
It ended 3.51 per cent lower at Rs 959.90 against the previous close of Rs 994.85. The market cap of the company fell to Rs 62,227.79. Currently, the shares are trading 51.4 per cent lower from its all-time high of Rs 1,961.05. The stock has tanked over 28 per cent on a year-to-date (YTD) basis.
According to Divam Sharma, Founder, Green Portfolio, there are a lot of headwinds for the company from a regulatory point of view. Adding to the woes, the company has recently seen hurdles at the senior level indicating serious concerns around management stability.
"We see a lack of credible management as a concern when it comes to increasing the non-payments businesses. We believe scaling distribution businesses like insurance distribution, loan distribution, credit card, etc. will need additional investments, and hence growth coming from these new business lines won't be profitable for a long time to come," he added.
Global brokerage firm Macquarie also slashed its target price for the stock by 25 per cent to Rs 900 from the Rs 1,200 earlier. It expects regulatory headwinds as the 'elephant in the room' for Paytm.
Last week, Paytm said that it is wrapping up its Canada consumer app from March 14. It had disabled scheduled payments and top-ups for Paytm cash including EMT transfers, Canada Post and transfers from January 14. However, the company clarified that the Paytm Canada consumer app is not material to its overall business, and contributed only 0.1 per cent to the company’s revenues.
Vijay Shekhar Sharma-led One 97 Communications made a tepid debut on November 18 last year. 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.
Recently, the company said that it saw 401 per cent year-on-year (YoY) rise in loan disbursals through its platform during the October-December quarter at 44 lakh. It disbursed loans amounting to Rs 2,180 crore, registering a 365 per cent YoY growth.
"We have seen stellar growth in each of the lending products, i.e. Paytm Postpaid (Buy-Now-Pay-Later), Personal Loans and Merchant Loans," the company said in its quarterly business update filed with exchanges.
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