Worst day for Paytm shares in nearly three months; what triggered the slide

Paytm parent One97 Communications' shares nosedived on Friday, halting a four-day rally that helped it grow almost 36 per cent in value in just four sessions, after news agency ANI reported China's Alibaba sold its entire stake in Paytm.

The Paytm stock finished the day with a loss of Rs 62.4 or 8.8 per cent at Rs 650.2 apiece on BSE — its biggest single-day fall in percentage terms since November 22, 2022. Paytm shares fell by as much as Rs 67.2 or 9.4 per cent to Rs 645.4 apiece on BSE during the session.     

Alibaba exits India - sells its entire stake holding in Paytm

Read @ANI Story | https://t.co/sQH68Ogv0C#Paytm #Alibaba #One97Communications pic.twitter.com/agBaf2v3Ax

— ANI Digital (@ani_digital) February 10, 2023

According to the ANI report, 2.1 crore Paytm shares, equivalent to 3.4 per cent of the company's equity, changed hands in a block deal. Alibaba sold its entire stake in Paytm in the block deal, ANI cited sources in the know of the development as saying. 

The China-based group had sold around 3.1 per cent in Paytm in January, out of its 6.3 per cent stake.

As of Thursday, the Paytm stock had grown 35.7 per cent in value in four back-to-back sessions, after a slew of positive views from brokerages sent the scrip soaring after the release of the digital payments company's quarterly numbers.   

Macquarie upgraded Paytm to 'outperform' from 'underperform' this week, nearly doubling its target price to Rs 800 from Rs 450. 

Last week, Paytm reported a quarterly net loss of Rs 392 crore for the quarter ended December 2022 as against a net loss of Rs 778.4 crore for the corresponding period a year ago. 

Paytm Founder and CEO Vijay Shekhar Sharma said: “I wrote to you on April 6, 2022, and set a target for EBITDA before ESOP cost breakeven by the September 2023 quarter... I am very happy to share that our company has achieved this milestone of EBITDA before ESOP cost profitability in the December 2022 quarter itself."

Sharma highlighted that Paytm had reached the milestrone three quarters ahead of its guidance.

Editor's take: Anil Singhvi says one should not form a view on a new-age stock basis performance in one quarter  

Zee Business Managing Editor Anil Singhvi remains skeptical on new-age stocks. "One should not trust results of just one quarter for new-age companies... Instead, observe the numbers for at least 1-2 quarters to form a view," he said.   

Despite intermittent spikes, Paytm shares have failed to revisit the price range of its IPO.

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