Shares of Paytm parent One97 Communications fell around 3% on Tuesday to hit an all-time low of ₹728.50 in the intraday trade on BSE.
The stock has tanked over 66% from its issue price of ₹2,150 in less than four months.
Shares of the digital payments firm ended the day at ₹737.85 apiece on BSE, mirroring a selloff seen in other new-age tech stocks. In comparison, the broader Indian markets closed higher led by gains in realty, IT, and pharma.
The stock is now trading closer to Macquarie’s revised target of ₹700. The brokerage had last month slashed its target price of Paytm citing profitability concerns and widening losses.
The Vijay Shekhar Sharma-led company had reported a massive loss of ₹780 crore in the third quarter, led by large stock options cost of ₹390 crore.
Prior to its issue, the firm had issued around 28 million ESOPs, which is expected to result in a recurring annual expense of around ₹1,600 crore, according to Macquarie estimates.
The brokerage has been bang on with its price targets for One97 Communications ever since it made a dismal public market debut on November 18, 2020.
On the day Paytm got listed, Suresh Ganapathy, who tracks the stock at Macquarie Capital Securities, was blunt in his initiating coverage note titled, “Too many fingers in too many pies”.
The analyst said that the dabbling in multiple business lines prevents Paytm from being a category leader in any business except wallets, which is becoming inconsequential given UPI’s meteoric rise as a digital payments alternative.
Macquarie has also been critical of Paytm's lending business. "Loan distribution business is still subscale with the company distributing only 39,000 merchant loans, which accounts just 2% of the overall loans by volume," the analyst had said.
One97 Communications, which launched the country’s largest-ever initial public offering (IPO) last year, witnessed a selloff by anchor investors such as Blackrock, Canada Pension Plan Investment Board, and Singapore's GIC ever since the lock-in expired on December 15, 2021.
On February 21, ICICI Securities initiated coverage on the digital payments major's stock with a 'Buy' rating and a target price of ₹1,352.
Paytm calls for evaluation and assessment quite differently and distinctly, especially given the management's "high growth aspirations calling for significant investments" and cash burn, rapidly evolving business model, highly competitive landscape with low switching cost and leading players with deep pockets getting aggressive and regulatory uncertainties, the domestic brokerage had said. The report estimated Paytm's intrinsic business value at ₹94,000 crore.
