Paytm on a bumpy ride; stock down nearly 50% from all-time high

Lately, the shares of Paytm (listed as One 97 Communications) have been under tremendous selling pressure. The stock hit an all-time low of Rs 990 on BSE today and has tanked over 49.5 per cent from its all-time high of Rs 1,961.05.
 
The shares came under pressure after the global brokerage firm Macquarie slashed its target price for the stock by 25 percent to Rs 900 from the Rs 1,200 earlier.
 
Macquarie expects regulatory headwinds as the "elephant in the room" for Paytm. The brokerage firm has also raised concerns over Paytm's lending operations, which the management had referred as an important growth driver before the initial public offering.
 
"Senior executives have been resigning from Paytm, which is a cause of concern and could impact business in our view if the current rate of attrition continues," it added.
 
Sonam Srivastava, Founder, Wright Research said that for existing investors, it is advisable to offload a few shares and use the same to invest elsewhere in the market as the opportunity cost to hold Paytm for a short-term period seems disappointing.
 
She noted that the notion around Paytm’s growth and path to profitability seems skeptical among investors. The technical charts indicate a bearish zone in the short term.
 
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.
 
The company extended its losses in the second quarter (July-Sept) to Rs 481.70 crore from Rs 376.60 crore in the first quarter (April-June) of 2021-22. The total income, however, increased by 19.62 per cent to Rs 1,134.50 crore in the same period.
 
The first half losses (April-Sept) stood at Rs 858.30 crore in 2021-22 as compared to Rs 723.60 crore in 2020-21. The total income jumped by 47.95 per cent to Rs 2,082.50 crore in the same period.
 
At 14:20 hours, the shares were trading 3.92 per cent lower at Rs 1,001.65. Market cap of the firm fell to Rs 64,940.81 crore on BSE.