Paytm shares tumble 5% amid block deal; snap four-day gain

Snapping four sessions gaining streak, shares of Paytm parent, One97 Communications, nosedived nearly 5% in opening trade on Friday, driven by a block deal. A total of 1.6 crore shares, or 2.56% equity, worth ₹1,441 crore changed hands at an average ₹884 per share. The names of the sellers and buyers were not ascertained immediately.

Early today, Paytm shares opened a tad lower at ₹922.75 against the previous closing price of ₹922.80 on the BSE. In the first hour of trade so far, the fintech stock declined as much as 4.6% to hit a low of ₹880 amid strong volume.

At the time of reporting, shares of Paytm were trading 2.6% lower at ₹899 apiece with a market capitalisation of ₹57,055 crore on the BSE. The counter was witnessing a surge in volume trade, with 8.65 lakh shares changing hands over the counter on the BSE against the two-week average volume of 1.07 lakh stocks.

The stock witnessed selling after rising nearly 4% in the last four straight sessions. The fintech major hit a 52-week high of ₹998.30 on October 20, 2023, and a 52-week low of ₹439.60 on November 24, 2022.

In the last one year, Paytm shares surged more than 100%, while it gained 68% in the calendar year 2023. The counter added 25% in six months, whereas it fell over 2% in a month as investors resorted to profit booking at higher levels.

For the July-September quarter of FY24, Paytm reported consolidated net loss of ₹292 crore, against a loss of ₹571 crore in the year ago period and ₹358 crore in June quarter of FY24, with its overall direct expenses dipping to ₹1,093 crore during the quarter under review.

The consolidated revenue rose 32% to ₹2,519 crore for the second quarter ended September 2023, from ₹1,914 crore in the corresponding period last fiscal, driven by increase in merchant subscription revenues, increase in gross merchandise value (GMV) and growth in disbursements of loans through our platform. Sequentially, the revenue grew 7% from ₹2,341 recorded in June quarter of the current financial year. 

The contribution profit jumped 69% year-on-year (YoY) to ₹1,426 crore, while EBITDA without counting employee stock option (ESOP) costs stood at ₹153 crore compared to a loss of ₹166 crore in Q2 FY23.

Post Q2, domestic brokerage Motilal Oswal gave a 'Buy' rating on Paytm shares with a target price of ₹1,160, saying that Q2 FY24 was largely in line, aided by sustained momentum in GMV and healthy growth in disbursements. The agency expects the company to achieve the EBITDA breakeven by FY25.

Global brokerage Bernstein also assigned an 'Outperform' rating on the stock with a target price of ₹1,100 per share, while BoFA Securities reiterated its ‘Buy’ rating and raised the target price to ₹1,165 from ₹1,020 earlier.

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