Paytm’s share price fell to a low of £ 1,165 ($ 15.71) Since its debut in the market in November next Japan’s largest initial offer After major brokerage firms have further reduced the price of paying shares.
The stockIt fell 5.3% at 1.55 pm India Standard Time, which opened at £ 1,226 on Monday. Paytm, which has been struggling to improve its share price since its debut, has fallen by more than 45% from its issue price of £ 2,150 ($ 28.9). At launch, the company’s market capitalization was $ 10.2 billion, almost half of what it was looking for at its debut, below the $ 16 billion valuation it raised in the late 2019 funding round.
The price plunge follows Monday’s report that brokerage firm Macquarie maintained its lowest rating on Paytm’s parent company, One97 Communications, and lowered its target price from its previously allocated £ 1,200 to £ 900 ($ 12.14). is. The market will debut on November 18th. With over 300 million users, Paytm operates a variety of businesses, including mobile wallets, credit charges, movie and travel ticketing businesses, and e-commerce services.
Macquarie was the only brokerage firm that had such a harsh view of Paytm’s outlook at the time of its market debut. In contrast, Bernstein analysts estimated Paytm’s valuation to fluctuate between $ 21 billion and $ 24 billion. (A Bernstein spokesman did not respond to a request for comment in November.)
“Posting the latest information and results from a variety of businesses will reduce the revenue CAGR for FY21-26E from 26% to 23%, especially as revenue forecasts on the distribution side are likely to be at risk. Analysts said on Monday that FY21-26E’s revenue estimates were reduced by an average of 10% each year as the decline in distribution and commerce / cloud revenue was partially offset by the increase in pay revenue. “
“Reduced revenue and increased employee and software costs reduced revenue by 16-27% in FY22-25E (increased loss forecast). 11.5 times the target multiple (from the previous 13.5 times). And due to the decrease in sales volume, we have significantly reduced the TP (target price) by about 25%. We will keep the revised TP up at 900 pounds. “
The brokerage firm said the digital payments regulations proposed by RBI could limit wallet charges and could adversely affect Paytm’s business. Macquarie also cited the resignation of Paytm’s senior executives and the reduction in ticket size for loans paid by Paytm as other factors that could affect the company’s future outlook.
In a report in the second half of December, Morgan Stanley analysts labeled Paytm’s stock as “overweight” and assigned a target price of £ 1,875 ($ 25.2). Indian financial services / commerce. “
“We believe that a huge TAM (fully available market), India’s unique technology architecture, and a partnership approach to support regulation are key enablers. India is a key driver of financial services. Insufficient penetration and strong growth across the segment. More importantly, the penetration of third-party digital distribution in financial services is very low and is expected to accelerate significantly over the next five years. This is backed by India’s distinctive rails on identity, payments and data sharing, “they write. Report to clients on December 18th.
“We also believe that Paytm’s financial services are synergistic, in line with regulatory thinking processes and scalable. Balance sheet risk is low, leveraging alternative datasets and customizing products. The Paytm technology features we design are some important additions to the above background. “
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