The stock recouped some losses at the end, closing at Rs 1,360.30 on Monday, 13% lower than Thursday’s closing price and 37% lower than the offer price of Rs 2,150. The company’s valuation has declined from Rs 1.4 lakh crore at the offer price to Rs 88,185 crore on Monday.
“No one knows when the correction will end in Paytm as there are no reliable valuation models to value the new-age digital companies,” said Geojit Financial Services chief investment strategist VK Vijayakumar. “Though these companies are likely to trade at a premium to existing companies due to their growth potential and ability to scale up operations, that doesn’t justify the abnormal premia at which they are trading now.”
In a report released on One97’s listing day, Macquarie had valued the stock at Rs 1,200, pegging it at 0.5 times the price-to-sales growth multiple on December 2023 annualised sales. According to Piyush Nagda, head, investment products, Prabhudas Lilladher, Paytm could see buying interest from institutions and family offices at around Rs 1,250-1,300 levels.
Better-listed fintech companies are available with reasonable valuations and certainty of growth, said analysts.
Paytm’s FY21 revenue was Rs 3,281 crore. Bajaj Finserv, a listed fintech company with a proven track record of continuous profit and growth, posted FY21 revenue of Rs 63,000 crore and profit of Rs 4,470 crore. It’s trading at a market cap of Rs 2.72 lakh crore. SBI Cards & Payment Services, with a revenue of Rs 9,301 crore and profit of Rs 985 crore in FY21, trades at a market cap of Rs 95,100 crore.
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“If we talk about the future outlook of Paytm, then it is still erratic because the market is not clear about its core business and timing of profitability,” said Santosh Meena, head of research, Swastika Investment. “Only very aggressive investors should stay invested in the company while others should look at exit opportunities at any pullback.”
According to a Bloomberg report, Vijay Shekhar Sharma, the founder and chief executive officer of One97 Communications, compared the stock performance to that of Tesla Inc. after the Indian payments startup suffered a brutal first-day plunge.
In a BSE filing, One97 said its gross merchandise value (GMV)—or payments made to merchants through its platform—jumped 131% to $11.2 billion in October from a year earlier. The number of its monthly transacting users (MTUs) grew more than 35% in October to 63 million from 47 million in the same month last year. GMV per MTU increased to $177 from $104.