Paytm shares slip below Rs1,000; expert decodes everything that's ailing the digital payments solutions' provider

Shares of recently listed Paytm has been consistently declining since its tepid debut on bourses. On Friday morning, paytm stocks slipped below Rs 1,000 per share for the first time since its debut to trade at Rs 995 apiece on the BSE as nothing seems to be working for this digital payments solutions' shares.  

At 11.05 am, shares of Paytm recoered over 2 per cent or 22.70 to trade at Rs 1054.10 per share in Friday's intraday trade on the BSE.  

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On November 19, shares of One97 Communications, which owns Paytm, were listed at a discount of 9 per cent at Rs 1,955 on the BSE. Paytm, which floated the largest IPO at Rs 18,300 crore, had fixed the issue price of Rs 2,150 per share. On the NSE, Paytm shares were listed at Rs 1,950. 

What's ailing Paytm Shares? 

Expert is of the view that expensive valuations and industry challenges have been marring the Paytm.  

"The biggest name in IPOs of 2021, Paytm failed miserably on the back of unrealistic valuations, big issue size, and industry challenges. It disrupted the payment industry after demonetization but it got disrupted by UPI therefore its wallet business failed," said Santosh Meena, Head of Research, Swastika Investmart Ltd. 

Breaking it down further, Meena said, Paytm has stiff competition In the payment business, while its eCommerce business didn't show any growth and has big competition.  

He said though Paytm pushes itself as a broker for financial products but there is no clear leadership in its any business.  

Explaining further, he said IRDA rejecting its foray into the insurance business could also impact its prospects of getting a banking license. 

Speaking about its founder Vijay Shekhar Sharma comapring Paytm with Bajaj Finance and saying the did more loans than the latter in the last 3 years, he said Bajaj Finance and HDFC Banks have proven track record for consistent profit and growth, while Paytm is still a loss-making company with burning cash. 

What should investors do?

" If we talk about the valuation, then it is still trading at 25X to its revenue, while at the same time, a prominent fintech player Bajaj Finserv is trading at just 4.5x to its revenue. There is no clarity about the timing of its profitability. Therefore we advise to avoid this company despite a correction of 50% from its IPO price," he added.