Shares of One97 Communications, the parent company of Paytm, continued to bleed on the second day since its listing, wiping over Rs 50,000 crore off its market capitalisation.
At 12:04pm today, the shares were trading at Rs 1,299 on the BSE, down over Rs 264, or almost 17 percent, from the previous session.
The stock had listed at a discount of 9 percent and closed down 27 percent on November 18 on the back of uncertainty over the business model, path to profitability, and concerns over steep valuations.
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Investor sentiment was hit after several brokerage firms flagged these concerns, especially a scathing ‘sell’ report by Macquarie just before the stock’s debut. The brokerage firm said the company lacked focus and direction and kept a target of Rs 1,200.
“Dabbling in multiple business lines inhibits Paytm from being a category leader in any business except wallets, which are becoming inconsequential with the meteoric rise in UPI payments. Competition and regulation will drive down unit economics and/or growth prospects in the medium term in our view,” the research house had said.
It further said that Paytm cannot make significant money by merely being a distributor, hence questioning its ability to achieve scale with profitability.
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A positive business update from the digital payments giant also failed to soothe the investor sentiment. On Sunday, Paytm said that it recorded a 418 percent year-on-year growth in the value of loans disbursed in October.
“October saw continued increase in adoption across our different financial services products. The lending business continued to show very strong growth as a result of rapid scale-up of all of our lending products, including Postpaid, consumer loans and merchant loans,” Paytm said.
The One 97 Communications Board of Directors will meet on November 27 to consider and approve the quarterly financial results. It is expected to subsequently release the July-September earnings numbers.
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