Shares of Paytm parent One 97 Communications plunged over 11 per cent to a one-year low in Tuesday’s trade after Macquarie analysts suggested Jio Financial Services could pose a “significant risk” to the digital payments firm. Is. Reliance Industries (RIL) recently announced that it will demerge its financial services business and rename it as Jio Financial Services (ZFS).
Paytm today fell 11.54 per cent to hit a record low of Rs 474.30 on the BSE. The stock finally closed at Rs 477.10 today, down 11.02 per cent. Earlier, the stock had hit an all-time low of Rs 511 (May 12).
A total of 14.52 lakh shares changed hands, with a turnover of Rs 71.63 crore. The market capitalization (m-cap) of the company stood at Rs 30,971.21 crore, down about Rs 89,000 crore from its all-time high of Rs 1.2 lakh crore.
The stock has fallen over 21 per cent in the last five trading sessions. On a year-on-year (YTD) basis, it has declined by around 64 per cent.
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Macquarie said Jio Financial Services has clarified that it plans to launch a consumer and merchant lending business based on proprietary data analytics to supplement and complement traditional credit bureau-based underwriting. Macquarie said the focus seems to be on consumer and merchant lending, which is the mainstay of NBFCs like Bajaj Finance and fintech companies like Paytm.
In its report, Macquarie Capital Securities (India) Pvt Ltd said, “NBFCs (Non-Banking Financial Services)/Fintechs, Bajaj Finance and Paytm may be most at risk.” However, shares of Bajaj Finance traded on a flat note today.
Paytm had made a sluggish debut on the exchanges in November last year. Since then, the shares have mostly registered losses.
At Tuesday’s low, the stock was down 78 per cent from its IPO issue price of Rs 2,150.
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Market participants largely remained ‘bear’ on the stock due to the end of the lock-in period, pre-IPO investor exit and Jio’s apparent entry into the fintech space.
Osho Krishna, Senior Analyst – Technical & Derivatives Research, Angel One Ltd., “Paytm is in a secular downtrend and has been placed at its lifetime low. The stock has been in a cycle of lower low – lower high, and there is no one to counter Relief from ongoing selling. Technically, all major indicators are bearish, indicating underlying weakness in the counter. Counter has broken previous swing low of 510-odd levels and entered new low The zone has no pit close on technical grounds. On the other hand, the bearish gap of Rs 535-600 zone remains a major hurdle in the comparable period.”
Prashant Tapase, Research Analyst, Sr. VP Research, Mehta Equities Ltd. said: “The end of the one-year mandatory lock-in for pre-IPO investors in Paytm has an overhang on the stock. With this challenge, Paytm has also been Jio Financial Services is feeling more heat than Paytm, PhonePe and even Bajaj Finance are venturing into the business model sector. This is a dangerous note for the space and investors are looking to burn such cash. Took a lot of time to sustain the companies with .And make money but most of them failed to keep alive the dream of profit.So many pre-IPO investors are looking to exit or buy their stake.Total Overall, we remain neutral to negative on this type of development.”
AR Ramachandran of Tips2trades said, “Despite good Q2 FY2023 results, exit of anchor investors and correction in mid- and small-cap stocks has triggered a strong sell-off in Paytm, which is still trading at 52 today.” -Has hit a week’s low. The stock is currently oversold.”
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He further said that investors should buy the stock only if the daily close is above Rs 560 for a target of 628-670 in the near term.
Paytm recently announced its second quarter (Q2) results for the financial year 2022-23 (FY23) and reported a 76 per cent year-on-year growth in revenue to Rs 1,914 crore. On a sequential basis, the company’s loss reduced by 11 per cent.
Meanwhile, Indian equity benchmarks traded higher today, snapping a three-session losing streak.