Paytm stock plunges 13% in nine sessions; Street eyes Q4 earnings

mutual funds (MFs) and foreign portfolio investors (FPIs) continue to bet on the firm as they upped stakes in the Vijay Shekhar Sharma-led company in the quarter gone by.

Paytm shares continue to see relentless selling, falling for the ninth straight session. The fintech firm's stock was locked at the 5 percent lower circuit as 56 lakh shares changed hands on BSE and NSE combined so far in the day, compared to the 1-month average trading volume of 17 lakh shares.

The recent fall comes after the news of the company's chief operating officer and president Bhavesh Gupta resigning from his position - as announced by the company on May 5.

However, the stock has been under pressure since January 31 when the Reserve Bank of India (RBI) asked the company's associate arm Paytm Payments Bank (PBBL) to halt its key banking services. This was followed by the departure of the Paytm Payments Bank MD and CEO Surinder Chawla.

Follow our market blog to catch all the live action

In the last six months, Paytm shares have plunged 62 percent. After the latest decline, Paytm's market capitalisation has fallen to Rs 21,223 crore equivalent to $2.5 billion. In 2021, at the time of its initial public offering (IPO) Paytm was valued at nearly $20 billion.

Shortly after listing, its m-cap fell below its last private market valuation of $16 billion to $13 billion, and the sharp share price fall this year has further eroded the value by $10.5 billion.

However, mutual funds (MFs) and foreign portfolio investors (FPIs) continue to bet on the firm as they upped stakes in the Vijay Shekhar Sharma-led company in the quarter gone by.

Data showed that domestic funds raised stake in Paytm by 1.17 percent to 6.15 percent in the March quarter against 4.99 percent in the December quarter. FPIs owned 20.64 percent stake in the company at the end of the March quarter as against 18.64 percent in the December quarter.

The dip in Paytm share price also comes ahead of Paytm's scheduled announcement of the March quarter results for fiscal year 2024. The quarterly results are likely to have been impacted following regulatory restrictions imposed by the RBI on PPBL.

Also, Read | Why Paytm President and COO Bhavesh Gupta resigned

In Q3FY24, Paytm exhibited strong revenue growth on the back of distributing loans on its platform, which was also a high-margin business. The lending platform's commission contributed around 20 percent to the company's revenue and around 25 percent to its margin.

However, after the RBI ban on PPBL, the company has paused lending activities for more than a month. This is likely to have impacted the company's revenue and profit more than it predicted in an investor conference call.

Disclaimer: The views and investment tips expressed by investment experts on Moneycontrol.com are their own and not those of the website or its management. Moneycontrol.com advises users to check with certified experts before taking any investment decisions.