Shares of Paytm’s parent company One97 Communications hit a record low on Tuesday after analysts at Macquarie Group pointed to the risks of billionaire Mukesh Ambani’s entry into the financial services business.
In a note, analysts at Macquarie Group, led by Suresh Ganapathy, said Reliance Industries Ltd’s Jio could pose “significant growth and market-share risk” to players such as Financial Services Ltd. Paytm and Bajaj Finance.
Shares of the digital payments giant have declined over 11% in Mumbai since the firm’s debut on the exchanges in November last year. Paytm shares were trading down by 9.23 per cent 487.45 per share on the NSE in afternoon deals today.
The stock has plunged up to 75% from its listing price as Paytm’s losses widened and SoftBank Group Corp reduced its stake in the platform.
Macquarie analysts believe that RIL already has a non-banking finance firm’s license, which it can leverage to scale up consumer and merchant lending. analysts aim to 450 on Paytm with an underperform rating.
RIL had announced last month that it would demerge and list its financial services unit to strengthen its presence in consumer businesses. This poses a fresh challenge for Paytm, which has been struggling since its $2.3 billion IPO last year, which was one of the largest ever in India.
Mehta Securities analyst Prashant Tapase said, “Jio’s plan has increased the difficulties of Paytm. Decreasing valuations of consumer technology companies are making it difficult for new investors to retain faith in these stocks.”
paytm lock-in period expired
Earlier in November, the lock-in period ended for pre-offer investors investing in Paytm, which is slated to be listed on the exchanges in November 2021.
According to the wholesale deal data available with the National Stock Exchange (NSE), SVF India Holdings (Cayman) Ltd sold around 2,93,50,000 shares, equivalent to 4.5% stake in the firm.
SVF India is a subsidiary of SoftBank.
Shares were sold at an average price of 555.67 per piece, taking into account the transaction value 1,630.89 crores.
SoftBank is the second largest shareholder in the company with 17.45% stake.
After the transaction, SoftBank’s stake will come down to 12.95%, while the digital payments giant will hold 17.45%.
with agency inputs
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