Paytm gains for third straight session; BlackRock, Canada Pension likely increased stake

Shares of One97 Communications, the parent company of Paytm, extended their gains for the third straight day after seeing a disappointing debut.

While analysts believed investors were trying to average out their buy price after the weak debut, a Bloomberg report said many anchor investors in Paytm’s initial public offering likely increased their stake in the payments giant after shares fell to as low as Rs 1,272.

BlackRock and Canada Pension Plan Investment Board bought more Paytm shares on Tuesday and Wednesday, the report said, quoting unnamed sources. However, the quantum of the stake increase was unknown.

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At 01:51pm, the stock was trading 2.4 percent higher at Rs 1,794 on the BSE. It hit an intraday high of Rs 1,875, which is more than 45 percent higher from its all-time low of Rs 1,271.25 hit on November 22.

That is still about 20 percent away from its issue price of Rs 2,150 as concerns persist about the expensive valuations, uncertainty over business model and path to profitability.

Most analysts believe valuation concerns are not going to abate anytime soon.

“Large investors who bought the shares in the IPO are looking to average down their acquisition price. The recent disclosure of last quarter’s operating performance has also helped the investor sentiment towards the stock,” said Abhay Agarwal, Founder and Fund Manager at Piper Serica.

Brokerage firm Macquarie had an underperform rating with a target price of Rs 1,200 as it believes Paytm’s business model lacks focus and direction.