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Paytm is testing March lows after July business update, IiAS stance on CEO's reappointment

The company in its monthly updates said its loan distribution business scaled to 2.9 million total loan disbursals during the month growing by 296 percent.

August 12, 2022 / 10:26 AM IST
Vijay Shekhar Sharma, Chief Executive Officer of Paytm

Vijay Shekhar Sharma, Chief Executive Officer of Paytm

 
 
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Shares of One 97 Communication (Paytm) slumped 5 percent in early trade on August 12 even as the company said its business grew manifold year-on-year (YoY) in July. However, uncertainty over reappointment of its CEO worked as a drag.

At 10:12 am, the stock traded at Rs 778 apiece on the BSE, down -5.75 percent, while the benchmark Sensex was at 59,368.51, up 35.91 points or 0.06 percent.

The company in its monthly updates said its loan distribution business scaled to 2.9 million total loan disbursals during the month growing by 296 percent. This aggregates to a total loan value of Rs 2,090 crore ($264 million) during the month (growth of 512 percent).

“Our loan distribution business is annualizing a run-rate of Rs 25,000 crore, and we believe there is ample opportunity for upsell in this business. We are being conservative on the quality of the book (especially given the possibility of macro headwinds),” the company said.

The company said total merchant gross merchandise value (GMV) processed through our platform for the month of July 2022 aggregated to approximately Rs 1.06 lakh crore ($13 billion), marking a YoY growth of 82 percent.

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A short term negative for the stock is advisory firm Institutional Investor Advisory Services India Limited’s (IiAS) opposition to the proposal to reappoint Vijay Shekhar Sharma as the Chief Executive Officer (CEO) of Paytm for another five years. They have advised the shareholders of the company to vote against the move.

Meanwhile, some brokerages said there is likely to be limited to no impact of latest RBI guidelines and should help remove one of the key overhangs on the stock.

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Regulations have remained a key focus area for Paytm investors, and recent developments such as digital lending guidelines, UPI through credit card, RBI’s payments vision document, etc. are largely neutral/positive for Paytm in our view,” said Manish Adukia, an analyst with Goldman Sachs India.

“We believe the next catalyst could be potential resolution of user onboarding ban on Paytm Payments Bank (PPBL), which Paytm recently mentioned PPBL is making good progress with. Apart from this, on the regulatory front, removal of any overhang on MDR (merchant discount rate; timeline unclear) could be another catalyst,” he added.

The broker has a ‘buy’ rating with a target price of Rs 1,100.

Disclaimer: The views and investment tips expressed by 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.
Moneycontrol News
first published: Aug 12, 2022 10:22 am
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