BENGALURU: Paytm shares crashed over 11% to close at a new low of Rs 475.55 on Tuesday. During the day, the stock hit a fresh low of Rs 474.30 on the NSE following a report by global brokerage firm Macquarie that said Paytm is likely to face headwinds from the entry of Mukesh Ambani's Jio Financial Services (JFS).
Macquire, which had correctly predicted Paytm’s initial share fall when the latter launched its IPO in November 2021, said even though it is too early to tell the exact customer segments and target markets that JFC has plans to cater to, it seems clear that it would focus on consumer and merchant lending, the mainstay of NBFCs like Bajaj Finance and fintech like Paytm.
As per the report, JFS, which is set for demerger from parent firm RIL and a separate listing on the exchanges, could become India’s fifth-largest financial services firm in terms of net worth. It pegged HDFC Bank, SBI, ICICI Bank, and Axis Bank to be the four top firms in the business. Paytm share prices have fallen 79% from its IPO price of Rs 2,150.
Its market cap now stands below Rs 31,000 crore as against Rs 1.39 lakh crore at the time of IPO launch. The stock was already under selling pressure following the expiry of the one-year mandatory lock-in period for pre-IPO investors. In the past 5 sessions, Paytm shares have dipped about 22% during which one of its largest shareholders, SoftBank, reduced its stake by 4.5% and mopped up over Rs 1,600 crore from the stake sale. Macquarie said RIL has a network of over 15,000 stores across several formats and a vast customer base (40 crore in telecom and 20 crores in retail).
This will provide great leverage to JFC and, in concept, become a formidable threat to incumbents. Macquarie expects JFS to have an edge over other NBFCs due to its deep-pocketed parentage, AAA credit rating, strong and well-capitalised balance sheet, large distribution footprint and strong ability to attract top-notch talent.
Paytm share hits fresh low of Rs 474.30
During the day, the stock hit a fresh low of Rs 474.30 on the NSE following a report by global brokerage firm Macquarie that said Paytm is likely to face headwinds from the entry of Mukesh Ambani's Jio Financial Services (JFS). Paytm shares have dipped about 22% in the past 5 sessions.