The share price of Paytm (One 97 Communications) might continue to fall, wiping off more than half of IPO investors’ money. Concerns for the stock include senior management departures, the company’s average merchant loan amount sliding below Rs 5,000 in the last year, and regulatory uncertainties in fintech and insurance.
Paytm, a fintech startup, has released its financial results for the fourth quarter of fiscal year 2021-22, claiming “stellar growth paired with scale-up of loan business and devices” during the reporting period.
Source: Aartisto
According to a statement from global brokerage company Macquarie, Paytm’s (One 97 Communications) share price might continue to decline, wiping out more than half of IPO investors’ wealth. The brokerage company has lowered its target price for the fintech behemoth to just Rs 900 per share, down from Rs 1,200 previously and 58 percent below the public issue price of Rs 2,150 per share. Paytm’s stock has had a terrible run on Dalal Street since its IPO in November last year. The stock has dropped 45 percent since its IPO. On Monday, the stock fell 4.76 percent to Rs 1,173 a share, a new intraday low.
Macquarie Securities has issued a report on Paytm, giving it an underperform rating and a target price of Rs 900 for the fintech company’s shares. At the time of publication, the stock was trading at Rs 1168.8, down 5% from its opening price on the BSE.
Senior management attrition, the company’s average merchant loan size falling below Rs 5,000 in the last year, and regulatory uncertainty in fintech and insurance are all worries for Macquarie analysts.
Target price and valuations of Paytm
While recent optimistic outlooks on Paytm shares from Morgan Stanley and JP Morgan have sought to rationalise prices, Macquarie analysts have labelled them as pricey. “The stock trades at 17 times FY23E revenues, which we view is overvalued,” the letter stated. The new target price of Rs 900 per share represents a 25% drop in the current market price of Paytm and a 58 percent drop from the IPO price.
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