Paytm tumbles 8% as Alibaba Group sells entire remaining stake

The exit comes days after Paytm posted its first-ever quarterly operating profit as a listed firm, nine months ahead of its own target.

After exiting from BigBasket, Alibaba Group on February 10 sold its entire remaining stake of over 2 crore shares in One97 Communications, the parent company of Paytm, via a block deal, stock exchange data showed.

The exit comes days after Paytm posted its first-ever quarterly operating profit as a listed firm, nine months ahead of its own target. Earlier this month, Alibaba Group's affiliate Ant Group nominee Douglas Feagin resigned from the fintech firm's board.

Alibaba group had sold a part of its stake in Paytm earlier in January 2023. It had also exited partially from food delivery platform Zomato, selling shares worth $200 million in November. The group still continues to hold about 10 percent stake in Zomato.

Reacting to the development, the stock of the company tumbled nearly 8 percent to Rs 650.75 on the NSE. However, it is still about 22 percent higher on a  year-to-date (YTD) basis.

As per the date on NSE, Alibaba sold 214,31,822 shares of Paytm at an average price of Rs 642.74, a 9 percent discount to Thursday's (February 9) close.

Meanwhile, Morgan Stanley Asia (Singapore) bought 54 lakh shares of Paytm at an average price of Rs 640 and also sold off 5,23,878 shares for Rs 667.66.

Ant Group's Feagin also resigned from Zomato's board on February 9, which it had partially exited from.

“Exiting from the boards of the stake holding companies allows Ant Group to undertake large trades without much complications,” a source in the know told Moneycontrol.

Paytm declined to comment on the developments when Moneycontrol reached out.

Speaking to CNBC-TV18 in January on the sidelines of the World Economic Forum in Davos, Paytm’s founder and CEO Vijay Shekhar Sharma said that he was not privy to Alibaba’s previous stake sale and that it could be planned better.

"Alibaba was never a strategic shareholder for us. Alibaba and Paytm were never together in the business... The exit could have been planned better, but it is what it is," he said.

Earlier this week, the Paytm parent reported its quarterly numbers. Revenue surged 41 percent to Rs 2,062 crore in the December quarter as compared with the year-ago period, while net loss narrowed to Rs 392 crore.

The digital payments and financial services company's loss in the corresponding period of the last fiscal was Rs 778 crore, whereas it stood at Rs 572 crore in the September quarter.

In a letter to shareholders, Paytm founder and chief Vijay Shekhar Sharma said the company had achieved operating profitability in Q3 -  three quarters ahead of the guidance.

Meanwhile, analysts at global brokerage firm Macquarie Research gave a double upgrade to the fintech firm's stock, taking it to 'outperform' from 'underperform', and raising the target price by 80 percent from Rs 450 to Rs 800.

Due to a sustained reduction in losses, the once bearish analysts said they have seen a 'very visible change in the approach of management to deliver profit' by the firm, owing to its recently reported profitability.