Shares Of Paytm Fall 8 Percent After Alibaba Block Deal Report

By Consultants Review Team Friday, 13 January 2023

Shares of renowned companies One97 Communications, parent company of Paytm declined almost 8.8 percent on Thursday after the company recorded a series of block deals in which around 19.20 million shares changed hands. 

The Paytm stock closed the day at INR 542.25 on the BSE, down 6.4%, after newswire Reuters reported that China's Alibaba Group sold a 3.1% stake in the digital payments firm for $125 million via a block deal. 

Alibaba, which held a 6.26% stake in Paytm as of September-end, sold the stake at INR 536.95 apiece, the report says. 

This comes weeks after the lock-in period for Paytm's pre-IPO investors ended in November 2022. SoftBank Group Corp, one of the biggest shareholders in One97 Communications, had earlier sold a 4.5% stake in the fintech giant through block deals for $200 million. 

In its quarterly business update last week, Paytm said it reported sustained growth in payments and loan distribution business by disbursing INR 3,665 crore ($443 million) worth of loans in the month of December, up 330% on a yearly basis. The total disbursements for the three months ended December 2022 stood at INR 9,958 crore, a growth of 357% year-on-year. 

The number of loans grew 117% Y-o-Y to 0.37 crore for the month of December, and 137% Y-o-Y to 1.05 crore cumulative loans for the three months ended December 2022. 

The payment solutions company also reported consistent growth in merchant payments volume, with the total Gross Merchandise Value (GMV) processed through its platform rising by 38% YoY to INR 3.46 lakh crore ($42 billion) for the quarter ended December 2022. “Our focus over the past few quarters continues to be on payment volumes that generate profitability for us, either through net payments margin or from direct upsell potential,” it said. 

The Paytm Super App also witnessed growth in consumer engagement with the average monthly transacting users (MTU) climbing 32% YoY to 8.5 crore during the quarter under review. The fintech major said the number of merchants paying subscriptions for payment devices has reached 0.58 crore as of December 2022, an addition of 0.1 crore devices in Q3 FY23. 

One97 Communications, which made a dismal public market debut on November 18, 2021, saw its consolidated net loss widen to INR 571 crore for the quarter ended September 30, 2022, as against INR 472 crore in the same period last year. Revenue from operations rose 76% to INR 1,914 crore as against INR 1,086 crore in the same period last year. 

Global brokerage JP Morgan has assigned an ‘Overweight’ rating to the stock, and raised the target price to INR 1,100, while ICICI Securities has reiterated a 'Buy' rating with a share target price of INR 1,285. Macquarie Capital Securities had last year cut the target price of One97 Communications to INR 450 per share from INR 700 earlier. 

Current Issue