Paytm shares gain over 1% after huge block deal

On August 25, Global research and broking firm Bernstein initiated coverage on Paytm owner One97 Communications Ltd with “outperform” rating and set a target price of Rs 1,100 a share

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Shares of Paytm owner One97 Communications Ltd opened higher on August 25 after a huge block deal. Around 22.70 million shares or 3.6 percent stake of the company changed hands in a bunch of trades, according to Bloomberg. However, details of the buyers and sellers were not known.

At 9.30am, the stock gained as much as 1.2 percent to hit a high of Rs 915 a share. India’s benchmark Sensex fell 0.24 percent to 65024 points.

Earlier on August 24, Bloomberg reported that Antfin, the Chinese fintech giant, is poised to conduct a block deal on August 25, potentially selling 3.6 percent of its stake, equivalent to 2.3 crore shares, in the fintech company Paytm. The anticipated floor price for this deal is expected to be set at a discounted rate of Rs 880.10 per share.

Paytm’s shares have impressively outperformed the market, rising by over 70% this year, supported by consistent revenue growth and reduced losses in recent quarters. The stock has surged by more than 100% from its lowest point in November 2022. Analysts predict that the company might achieve operating breakeven by mid-FY25. However, caution prevails among analysts due to the entry of Reliance Jio.

Analyst view

On 25 August, Global research and broking firm Bernstein initiated coverage on Paytm owner One97 Communications Ltd with “outperform” rating and set a target price of Rs 1,100 a share. Currently, the stock has 12 buys, two holds and zero sell rating, according to Bloomberg.

On August 7, Paytm reported that its CEO, Vijay Shekhar Sharma, and Antfin have made a deal. Sharma’s company, Resilient Asset Management BV, fully owned by him, will acquire a 10.3 percent stake in Paytm from Antfin through an off-market transfer. This will raise Sharma’s ownership in Paytm to 19.42 percent and decrease Antfin’s ownership to 13.5 percent.

Apart from Antfin, other Paytm shareholders are also divesting from the company. SoftBank has been consistently selling shares over the past few months, generating more than $200 million in proceeds. Earlier this year in February, Alibaba Group disposed of its remaining stake in Paytm for around Rs 1,378 crore or $167.14 million. Between February 10, 2023, and May 8, 2023, SVF India Holdings (Cayman) Ltd, an affiliate of SoftBank, sold 13.10 million shares or 2.07 percent stake, for around $120 million.

Recently, the government and the Reserve Bank of India have also expressed concerns regarding the large Chinese shareholding in Paytm.