Paytm stock up 15% in two days on BSE amid heavy volume; what's happening?

In the past one month, Paytm stock has outperformed the market by zooming 25 per cent, as compared to 4.5 per cent rise in the BSE Sensex, data shows

Shares of One97 Communications, the parent company of Paytm, continued at their march for the second straight trading session on Monday, July 8, surging 9 per cent to Rs 475.570 on the BSE amid heavy volumes.

In past two trading days, Paytm stock has soared 15 per cent. In past one month, it has outperformed the market by zooming 25 per cent, as compared to 4.5 per cent rise in the BSE Sensex.  The stock has recovered 53 per cent from its 52-week low of Rs 310 touched on May 9. It had hit a 52-week high of Rs 998.30 on October 20, 2023.

 

At 12:47 pm on July 8, Paytm stock was quoting 8 per cent higher at Rs 472.90, as compared to 0.12 per cent decline in BSE Sensex. The average trading volumes on the counter jumped nearly four-fold. A combined 10.1 million shares have changed hands on the NSE and BSE.

Paytm is India's leading mobile payments and financial services distribution company. Pioneer of the mobile QR payments revolution in India, Paytm builds technologies that help small businesses with payments and commerce. Paytm’s mission is to serve half a billion Indians and bring them to the mainstream economy with the help of technology.

According to a Moneycontrol report, Vijay Shekhar Sharma, founder and CEO of Paytm, has set a bold ambition to elevate the company's value to $100 billion, amidst efforts to rebuild following a recent regulatory setback.

Meanwhile, on June 16, Paytm said the Company routinely explores various strategic opportunities aimed at enhancing shareholder value. The potential transfer of Paytm’s Entertainment business, a component of our Marketing Services, is one opportunity under consideration.  The company had made clarification on media coverage regarding ' Zomato in talks to acquire Paytm's movies, ticketing business’.

Paytm further said the company’s focus will be on payment and financial services along with digital goods commerce, which are designed to help its merchants scale their businesses. However, any discussions currently underway are preliminary and do not involve any binding agreements that require approval or disclosure. As such, any information pertaining to these discussions should be considered speculative at this time, the company had said.

Earlier in May, a media report suggested that Adani group in talks with Sharma to acquire stake in Paytm. However, Paytm had clarified that the news item was speculative and the Company was not engaged in any discussions in this regard.

Analyst view on Paytm stock

Meanwhile, according to analysts at Emkay Global Financial Services, as part of its strategy of focusing on the dwindling core business—viz. Payments and Financial Services— post RBI action, Paytm is exploring a deal with Zomato (foodtech) to transfer its high-margin (take rate: 5-8 per cent) movies and event ticketing business (a subset of Marketing Services); this is likely to hit Paytm’s customer traffic.

Similarly, Paytm has shelved plans to manufacture General Insurance products, and instead focus on distribution. Paytm’s subsidiaries Wasteland Entertainment (Paytm Insider) and Orbgen Tech (Ticketnew.com) logged FY23 revenue of Rs 193 crore and Rs 16 crore, leading to marketing/overall revenue share coming in at around 14 per cent/3 per cent, the brokerage firm said stock update.

"Assuming higher revenue of Rs 264 crore in FY24 (factoring in strong traction in Q3FY24), Zomato is reportedly offering higher deal value of ~Rs 2,000 crore (8x revenue), incl. receivables. The deal would shore-up Paytm’s cash balance (~Rs 5,300 crore) and could be used to scale-up rewards/cash-back program to revive its payment business (UPI mkt share down, to 6 per cent in May-24 vs 10.5 per cent in Jan-24)," said a note from a domestic brokerage.

"Given the business slowdown, the management guided to EBITDA loss (exESOP) of Rs 500-600 crore in Q1FY25, as the full-quarter impact of business disruption gets absorbed," the brokerage firm said.