Paytm plunges 36% from issue price; Fino Payments Bank falls for 5th day

Paytm shares were down 12% to Rs 1,370 on the BSE in the intra-day trade

Shares of One97 Communications, the parent company of digital payments major Paytm, and Fino Payments Bank continued to trade under pressure, falling up to 12 per cent on the BSE in Monday's intra-day trade, after a weak market debut last week.

The stock of Paytm slipped 12 per cent to Rs 1,370 on the BSE, extending its 27 per cent decline on Thursday. With today's fall, the stock has fallen 36 per cent against its issue price of Rs 2,150 as investors remain cautious on the company's lofty valuation and remain sceptical about its business model.

Paytm is India's leading digital ecosystem for consumers and merchants. It is the largest payments platform in India, with a GMV of around Rs 4 trillion in financial year 2020-21 (FY21). The company offers consumers & merchants, technology-led, easy-to-use digital product and services as well as easy and inclusive access to financial service.

"The company has a huge customer base with strong brand positioning and it has an early mover advantage in digital payment services however it is still a loss-making company and very aggressively priced therefore we saw a tepid response in terms of subscriptions. It is difficult to value such kind companies for time being but by the time market will understand the way to value such kinds of businesses where the market will focus on how fast it will become profitable and how well it will use its strength to explore new businesses like Credit card and Payment banking," said Santosh Meena, Head of Research at Swastika Investmart.

Meanwhile, the company said over the weekend that its gross merchandise value (GMV) for the month of October touched Rs 832 billion (around $11.2 billion), a growth of 131 per cent on a year-on-year (y-o-y) basis. For the quarter ended September 31, 2021, the GMV grew 107 per cent y-o-y at Rs 1,956 billion. READ ABOUT IT HERE

"While the GMV has grown 112% YoY, it is dominated by UPI (66% in FY21 as per our estimates), where PayTM earns zero-MDR. We see UPI share climbing up to 85% by FY26E. Hence, we do not see the strong reported GMV growth materially affecting our P&L estimates. For the overall industry, UPI GMV has growth at 117% in Apr-Oct’21 period, with P2P growing at 105% and P2M at 190%. Hence, PayTM’s strong GMV growth mirrors the industry trend for UPI," wrote Suresh Ganapathy and Param Subramanian of Macquarie in a November 22 report. The brokerage has a 12-month price target of Rs 1,200 on the stock.

Click here for Macqurie's operational metrics estimates

On the other hand, the stock of Fino Payments Bank, too, dipped 12 per cent to Rs 395.55 on the BSE in the intra-day trade today. The stock continued to trade lower for the fifth straight day. The stock had debuted on November 12, 2021.

Fino Payments Bank had debuted at Rs 545.25, a 4 per cent discount to its issue price of Rs 577 per share. Currently, the stock is down 31 per cent from its issue price. Fino Payments Bank is a fintech company offering a diverse range of financial products and services that are primarily digital and have a payments focus.