Paytm Hits Record Low As Macquarie Calls Jio Financial A 'Threat'

The company's market capitalisation has also tanked, from Rs 1.15 lakh crore a year ago to below Rs 33,000 crore now.

<div class="paragraphs"><p>Paytm app on a phone. (Photo: Usha Kunji/BQ Prime)</p></div>
Paytm app on a phone. (Photo: Usha Kunji/BQ Prime)

Shares of One97 Communications Ltd. fell to its lowest since listing as unabated selling continued, led by pre-IPO investors.

As per SEBI, a one-year lock-in period is necessary for pre-IPO investors, post listing of the shares on the bourses. This expired on Nov. 15, releasing approximately 86% of the company's shares for trading.

Several marquee investors, such as Japan's SoftBank and Societe Generale, have cut their holdings in the Vijay Shekhar Sharma-led firm since the lock-in expired.

Shares of the company slid as much as 11.7% intraday to Rs 474.3 apiece, a far cry from its IPO price of Rs 2,150. The stock closed 11.2% lower at Rs 476.8 apiece.

The company's market capitalisation has also tanked from Rs 1.15 lakh crore a year ago to below Rs 33,000 crore.

Shares of the company have plunged 24% since the expiry of the lock-in period. The stock witnessed high trading volume, about 4.3 times the 30-day average. The relative strength index of the stock was at 19, indicating that it may be in 'oversold' territory.

Still, several analysts remain bullish on the company.

Of the 12 analysts tracking the company, six maintain a buy, three suggest a 'hold' and three recommend a 'sell', according to Bloomberg data. The 12-month consensus price target implies an upside of 76.5%.

Separately, Macquarie in a note dated Nov. 21, said Paytm could be at risk from Jio Financial Services. 

“Jio Financial Services will have a large balance sheet, not be asset-light and eventually manufacture most product offerings, giving it a significant competitive advantage… It can be a real threat to fintech business models as well as NBFCs. Jio Financial not only can offer attractive rates in merchant lending and digital unsecured lending markets, but also be reasonably competitive in the secured lending market eventually,” it said.

Macquarie had also predicted Paytm’s flop listing, where it initiated coverage hours before its debut with a target price implying a potential downside of more than 40%.

It also has the lowest target price on the stock currently, at Rs 450.