The BSE has sought a clarification from One 97 Communications, the parent company of digital payments platform Paytm, over the steep fall in the prices of its shares.
“The exchange has sought clarification from One 97 Communications on March 22, 2022, with reference to significant movement in price, in order to ensure that investors have the latest relevant information about the company and to inform the market so that the interest of the investors is safeguarded,” BSE said.
It added, “the reply is awaited”.
As of the close of market on March 22, One 97 Communications shares ended 3.84% lower at Rs 544 on the NSE. The stock so far has seen a correction of 74.7 percent from its IPO price of Rs 2,150 apiece. Paytm, made a weak debut on the bourses.
Today, Paytm stock ended 4.4% lower at Rs 522 apiece, marking a fresh low of Rs 521.
On the day of listing i.e. November 18, 2021, the stock fell more than 27%.
In an answer to the BSE query, on March 23, Paytm replied: “We would like to inform you that our Company has been complying with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and have, from time to time, made all necessary disclosures to the Stock Exchanges within the stipulated timeline. Further, as of date, there is no information/ announcement, which in our opinion may have a bearing on the price/ volume behavior in the scrip of the Company and which is yet not disclosed to the Stock Exchanges.”
It added that the fintech company fundamentally remains robust and its last release earnings on February 04, 2022, is a testament to it.
“We would like to reiterate that the Company is committed to complying with the Listing Regulations and any information/ announcement, likely to have bearing on the price/ volume of the shares of the Company would be disclosed, from time to time, to the Stock Exchanges within the stipulated timeline,” the statement added.
Factors That Fueled The Dip In Stock
Sentiments of retail investors often get shaken when any information related to any particular listed company opens to the public.
The news about the Reserve Bank of India (RBI)’s order to Paytm to stop onboarding new customers to its Paytm Payments Bank impacted the stock, and it plunged to an all-time low.
Then, revelations like the RBI audit discovering Paytm sharing customer data with Chinese companies worsened the stock’s health, and investors seemed to question the future of the stock.
Action against Paytm Payments Bank Ltd under section 35 A of the Banking Regulation Act, 1949https://t.co/tqWfwt7mT3
— ReserveBankOfIndia (@RBI) March 11, 2022
The RBI had therefore directed Paytm Payments Bank to appoint an IT audit company to inspect the IT system. Paytm Payments Bank reportedly has 300 Mn wallets and 60 Mn bank accounts linked.
Besides Payments Bank news, reports allegedly talking of the arrest of founder and CEO Vijay Shekhar Sharma impacted the stock. Later, Paytm called such a claim a doctored story.
What Analysts Think About Paytm?
Paytm with an IPO price of Rs 2,150, valued the market capitalization of Rs 1,39,432.7 crore, which has now nosedived four times to Rs 35,273.23 crore. In the last four months, the stock has shaved Rs 1.04 lakh crore from its market cap.
Macquarie Capital Securities had last week cut down the target price of One97 Communications to Rs 450, 36% lower from Rs 700 it had predicted in February.
The brokerage firm downgraded the valuation estimate for Paytm in line with the derating in global fintech companies.
“RBI’s regulations on digital payments and BNPL (Buy Now Pay Later), and stricter KYC and compliance norms will all be adverse developments for fintech companies in general, potentially bringing down unit economics and/or growth, in our view. We see these as additional headwinds for Paytm, which could cloud its path towards profitability,” the Macquarie report stated.
Avoid The Stock:
Dr. Ravi Singh-vice president at ShareIndia, said, as Moneycontrol reported, “Paytm stock is in a continuous downtrend on negative sentiments and may touch the levels of 500 – 450 in the near term. Investors must avoid this stock for the time being.”