Paytm shares fall 3% after SoftBank sells another 2% stake

Shares of One 97 Communications, the parent of Paytm, fell nearly 3% in intraday trade on Tuesday after Japan-based SoftBank sold another 2% stake in the financial technology company. SVF India Holdings (Cayman), a wholly owned subsidiary of SoftBank Vision Fund L.P., of which SoftBank Group Corp. is a limited partner, has offloaded a 2.01% stake in One97 Communications through an open market transaction in order to comply with SEBI regulation. Post the stake sale, SoftBank will now have around 9.15% stake, or 580,37,648 shares, in Paytm.

Weighed down by the development, Paytm shares declined as much as 2.5% to hit an intraday low of ₹840.50 on the BSE, while the market capitalisation dipped to ₹53,535 crore. Early today, the fintech stock opened marginally higher at ₹862.65 against the previous closing price of ₹862.55.

Paytm shares had decent performance in the last one year, especially in the calendar year 2023, after the company reported constant improvement in contribution margin and operating leverage, which may drive operating profitability. The stock has risen 15% in 12 months, while it surged 58% on a year-to-date (YTD) basis. The stock, however, lost 3% in a month. It touched a 52-week high of ₹915 on June 19, 2023, and a 52-week low of ₹439.60 on November 24, 2022.

Masayoshi Son-led SoftBank, an early investor in Paytm, has been selling its stake in Paytm in tranches after the one-year lock-in for pre-IPO investors ended in November 2022. Post the expiry of the lock-in period, the Japanese investment major sold nearly 4.5% shares in Paytm for ₹1,631 crore through an open market transaction in November last year. Following this, SoftBank sold 13,103,148 shares between February 10 to May 8, 2023, which accounted for 2.07% of the total shareholding.

The Japanese venture fund, which made a total investment of around $1.6 billion in Paytm, took out $220-250 million by paring its stake in the company via IPO route in November 2021. In the country's second largest-ever IPO, the company had raised ₹18,300 crore via public listing of shares at an issue price of ₹2,150.

The Vijay Shekhar Sharma-led fintech company is set to release its June quarter earnings report on July 21, 2023. For the March 2023 quarter, the firm registered a sharp decline in its net loss, driven by strong revenue growth and improvement in margins. The Noida-based financial technology company reported a consolidated net loss of ₹168.4 crore in the fourth quarter of FY23, against a loss of ₹761.4 crore in the same period of the previous year and a loss of ₹392 crore in the December 2022 quarter.

For Q4FY23, the revenue from operations stood at ₹2,334.5 crore, up 51.5% from ₹1,540.9 crore in Q4FY22 and 13.2% from ₹2,062.2 crore. The revenue growth was aided by rise in Gross Merchandise Value (GMV), higher merchant subscription revenues, and a surge in loans distributed through its platform.

On the operational front, Paytm’s EBITDA before ESOP cost improved by ₹602 crore YoY to ₹234 crore in Q4FY23 from a loss of ₹368 crore in the year-ago period. In the December quarter of 2022, EBITDA before ESOP cost was ₹31 crore.

The gross merchandise value (GMV), the value of goods sold via customer-to-customer or e-commerce platforms, jumped 40% YoY and 4.6% QoQ to ₹3.62 lakh crore in Q4 FY23. 

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