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Paytm has gained market share in digital payments versus PayU, the broker said adding that the company is trading at 5x FY24e EV/contribution profits. The broker acknowledged overhang risks from further selling by existing pre-IPO shareholders. However, it added that fintech is a competitive space but at these valuations, risks are overdone.
The Paytm stock slumped 19.27% in the past four sessions. It hit a record low of Rs 439.60 on 24 November 2022.
Japanese conglomerate SoftBank Group sold 4.5% stake in One 97 Communications (Paytm) via bulk deal on 17 November 2022.
As per the bulk deal data on the NSE, SoftBank's SVF India Holdings (Cayman) on 17 November 2022, offloaded 2,93,50,000 shares or 4.52% stake in Paytm's parent at an average price of Rs 555.67 each for Rs 1,630.89 crore through an open market transaction.
As of 30 September 2022, SoftBank held a 17.45% stake in Paytm through SVF India Holdings (Cayman).
The sale followed the end of one-year mandatory lock-in for pre-IPO investors in Paytm. The stock entered the bourses on 18 November 2021. It was listed at Rs 1955, a discount of 9.07% compared with the initial public offer (IPO) price of Rs 2150. The IPO of Paytm was subscribed 1.89 times. The issue opened for bidding on 8 November and it closed on 10 November. The price band of the IPO was fixed at Rs 2080 to Rs 2150 per share.
SoftBank had invested $1.6 billion in Paytm and had sold a partial stake worth $220-250 million in the IPO last year.
Meanwhile on 17 November 2022, BOFA Securities Europe SA bought 50,26,428 equity shares (0.77% equity) of Paytm. Morgan Stanley Asia Singapore PTE bought 60,03,468 equity shares (0.93% equity) and Societe Generale - ODI bought 70,85,227 equity shares (1.09% equity).
One 97 Communications is the digital financial services firm which operates under the Paytm brand. Paytm is India's payment super app offering consumers and merchants comprehensive payment services.
On a consolidated basis, One 97 Communications' revenue surged 76.2% to Rs 1914 crore in Q2 September 2022 over Q2 September 2021. The revenue was driven by increase in merchant subscription revenues, growth in bill payments due to growing MTUs (monthly transacting users) and growth in disbursements of loans through platform. However, the company's consolidated loss widened to Rs 571.10 crore in Q1 June 2022 from net loss of Rs 472.90 crore a year ago.
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