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Paytm stock drops to record low – TechCrunch


Paytm stock drops to record low – TechCrunch

Shares of Paytm closed Monday at ₹1,157 ($15.6), the lowest since its market debut in November following the nation’s biggest-ever initial offering after a key brokerage house further cut its price on the payments stock.

The stock, which opened Monday at ₹1,226, dropped 6% at 3.30 pm India standard time. Paytm, which has been struggling to improve its stock price ever since its debut, has slid by over 46% from its issue price of ₹2,150 ($28.9). The firm’s market cap, at the time of publishing, was $10.13 billion, nearly half of what it had sought during the debut and below the $16 billion valuation at which it raised a financing round in late 2019.

The plunge in price follows brokerage house Macquarie’s report on Monday in which it retained its lowest rating on One97 Communications, the parent firm of Paytm, and cut its target price to ₹900 ($12.14), down from ₹1,200 that it had assigned ahead of the market debut on November 18. Paytm, which says it has amassed over 300 million users, operates a number of businesses including mobile wallet, credit top-ups, movies and travel ticketing businesses, and an e-commerce service.

Macquarie was the only brokerage firm which had such a grim view on Paytm’s outlook at the time of market debut. Analysts at Bernstein, in comparison, had estimated that Paytm’s valuation will swing between $21 billion to $24 billion. (A Bernstein spokesperson did not respond to a request for comment in November.)

“Post the various business updates and results, we believe our revenue projections, particularly on the distribution side, is at risk and hence we pare down our revenue CAGR from 26% to 23% for FY21- 26E. We are roughly cutting revenue estimates for FY21-26E on an average by 10% every year due to lower distribution and commerce/cloud revenues offset partially by higher payment revenues,” Macquarie analysts wrote Monday.

“We cut our earnings (increase our loss projections) by 16-27% for FY22-25E owing to lower revenues and higher employee and software expenses. We cut our TP (target price) sharply by ~25% owing to lower target multiple of 11.5x (price…

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