Paytm falls for 10th day in a row to hit new all-time low, longest losing streak since listing; what's behind the crash?

Today's downturn successful One 97 Communications marks the 10th consecutive league of losses for the stock, which was the longest losing streak since listing successful November 2021. During this period, the banal has fallen from ₹391.35 apiece to today's closing terms of ₹317, translating into a driblet of astir 19%. 

Also Read: These 300 stocks autumn implicit 10% from their 52-week highs. Time to beryllium cautious?

Aditya Birla Finance, a important lending spouse for the company, is reported to person exercised indebtedness guarantees provided by the fintech firm. This enactment follows repayment defaults from customers, arsenic per sources acquainted with the matter, cited by The Economic Times.

Additionally, Piramal Finance and Clix Capital person terminated their partnerships with Paytm, indicating challenges successful the company's lending business. These decisions travel successful the aftermath of the cardinal bank's prohibition connected Paytm Payments Bank and a broader slowdown successful unsecured user lending, arsenic reported by the aforesaid sources.

Also Read: Paytm's stock successful UPI marketplace declines to 9% successful March, lowest successful past 4 years

One root acquainted with the substance told ET that Aditya Birla Finance whitethorn person invoked a important sum, perchance amounting to hundreds of crores of rupees. This improvement is expected to importantly interaction the company's financials, particularly amidst accrued regulatory scrutiny from the cardinal slope successful the sector.

In effect to ET's inquiries, a spokesperson from Paytm said, "We categorically cull each speculations concerning our lending business. We person resumed lending services with a prime fewer partners and are actively engaged successful discussions to grow with the remaining lending partners. Paytm does not supply a First Loss Default Guarantee (FLDG) to lenders; our relation is strictly that of a distributor."

Also Read: Paytm: Two much apical executives depart amid restructuring efforts

Another origin that is dragging the banal little is the company's announcement implicit the play regarding the resignation of its President and Chief Operating Officer, Bhavesh Gupta. According to the company, Gupta's resignation, occurring conscionable a twelvemonth aft his appointment, is attributed to idiosyncratic reasons. 

This marks the 2nd high-profile resignation wrong a month, pursuing the departure of Surinder Chawla, Chief Executive Officer and Managing Director of Paytm Payments Bank, connected April 9th.

UPI transaction measurement down 

Adding to the challenges is the diminution successful the company's Unified Payments Interface (UPI) transactions for the 3rd consecutive period successful April.

In April, the institution processed 1,117.13 cardinal transactions, marking a 9% month-on-month alteration from the 1,230.04 cardinal transactions handled successful March. 

Consequently, the company's marketplace stock successful the UPI ecosystem has contracted, Business Standard reported connected Tuesday, citing information from the National Payments Corporation of India (NPCI).

Also Read: India recorded astir 131 cardinal UPI transactions successful FY24, says FM

In April, the institution held an 8.4% marketplace stock successful the UPI applications’ ecosystem, down from 10.8% and 9.13% successful February and March, respectively. Despite this decline, the institution remains the 3rd largest subordinate successful the ecosystem, arsenic different players are considerably smaller successful examination to the fintech major, the study said. 

The diminution successful UPI transaction measurement began aft the RBI imposed restrictions connected Paytm Payments Bank.

Also Read: Paytm completes merchant migration to caller UPI ids

Down 85% from IPO price 

With the stock's existent closing terms of ₹317.15 per share, it is trading astatine an 85.25% discount compared to its contented terms of ₹2,150 per share. This presents challenges for investors who participated successful the archetypal nationalist offering and person held onto their positions. The company's existent marketplace capitalisation is ₹20,164 crore.

Meanwhile, SoftBank entity SVF India Holdings importantly reduced its involvement successful the institution from 6.46% successful Q3 FY24 to 1.40% successful the March 4th (Q4 FY24). 

Disclaimer: The views and recommendations fixed successful this nonfiction are those of idiosyncratic analysts. These bash not correspond the views of Mint. We counsel investors to cheque with certified experts earlier making immoderate concern decisions.

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Published: 08 May 2024, 04:57 PM IST