Advantage Paytm say analysts as Alibaba cuts stake in Vijay Shekhar Sharma-led fintech

China's Alibaba Group has reportedly sold a 3.1 percent stake in Indian digital payments firm Paytm for a total of $125 million through a series of block deals on Thursday. About 2,59,930 shares were sold at Rs 535.90 apiece worth Rs 13.93 crore. With this Alibaba, has reduced almost half of its stake in the company – from 6.3 percent to 3.1 percent.

For Paytm shareholders and retail investors, this will be positive as the fintech may benefit from the lowering stake by its Chinese shareholder.

“Alibaba selling shares in Paytm could be good news for shareholders as it reflects that Chinese shareholding is reducing in the company. This would benefit them in FDI and as the company is already on path to profitability, this will further allay investor concerns," said Avinash Gorakshakar, Head Research, Profitmart Securities.

Paytm has been in the news for the past few days for its buyback and business update. Paytm recently informed exchanges that the Paytm Super App continues to see growing consumer engagement with the average monthly transacting users (MTU) at 85 million, a growth of 32 percent YoY.

Paytm’s Gross Merchandise Value (GMV) processed through the platform for the quarter ended December 2022 aggregated to Rs 3.46 Lakh crore ($42 billion), marking a year-on-year (YoY) growth of 38 percent. Paytm’s lending business also continues to grow with the number of loans disbursed in December increasing by 117 percent YoY to 3.7 million.

“Paytm continues to be on track for its profitability plans, with robust revenue growth driven by its strong business model. We are anticipating good Q3 results from the company. With Chinese shareholding reducing, as Alibaba pares its stakes across tech companies in India, it is good news for investors,” said market expert Rahul Sharma, from Equity99 Advisors.

Meanwhile, its associate Paytm Payments Bank has received RBI approval to appoint Surinder Chawla as its Managing Director and CEO.

Paytm share price closed at Rs 560.50 on NSE on Friday, up 3.18 percent. The one-year return on the stock is negative, with the fintech scrip down by almost 50 percent.