Paytm suffers steep 9% decline after Alibaba affiliate’s likely sale of 2 crore shares

Ant Financial, an affiliate of Alibaba Group, is the likely seller in the Paytm block deal, which dragged the stock to its steepest fall since November 22 to Rs 528 a share on Thursday

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Shares of Paytm plunged 8.8 percent on Thursday after parent One97 Communications Ltd recorded a series of block deals in which around 19.20 million shares, or 3 percent stake, of the company changed hands.

Paytm suffered its steepest fall since November 22 to Rs 528 a share on Thursday. At 1.40pm, the stock was trading 549 on the BSE, down 5 percent from its previous close.

The stock had traded in the green in 12 out of last 14 sessions since December 26 and gained 15 percent in this period.

CNBC-TV18 on Thursday reported that Ant Financial, an affiliate of Alibaba Group, is the likely seller in the Paytm block deal. Ant Financial, as of September 2022, held 164.42 million shares or 24.88 percent stake in the company.

According to Goldman Sachs calculations, Antfin Netherlands Holding had acquired shares between 2015 and 2019 at an average cost of Rs 300 a share. Meanwhile, had invested in Paytm in 2015 at an average cost of acquisition of Rs 330. It had a 6.26 percent stake as of September-end.

On January 9, Paytm reported to exchanges that it disbursed 3.7 million loans worth Rs 3,665 crore in December, up 330 percent on-year. For the December quarter, its total disbursements jumped 357 percent to Rs 9,958 crore. Monthly transacting users jumped 32 percent to 85 million in December from 65 million a year ago. Gross merchandise value processed through the platform saw a 38 percent growth year-on-year in December to Rs 3.64 lakh crore.

The digital payments company also added one million payment devices during October-December and the number of merchants paying subscription for payment devices touched 5.8 million as of December 2022.

The company’s consumer engagement was at its highest on Paytm Super App with average monthly transacting users at 85 million for the quarter ended December 2022, up 32 percent on a yearly basis.

Paytm board in December approved buyback of shares worth Rs 850 crore ($103 million) through the open market route. The number of shares bought back will be 10.5 million at the maximum buyback price of Rs 810, representing 1.6 percent of the paid-up share capital. Paytm has $1.1 billion in cash as of September 2022 and $127 million outlay of cash for buyback.

Also Read: Paytm buyback: The good, the bad, and the ugly

“We expect it to burn $33 million over the next three quarters before turning Adj Ebitda breakeven in 2QFY24. We expect the buyback announcement at a 50 percent premium to provide support to the stock price in the near term. The reduction in cash because of the buyback offsets the reduction in share count thereby keeping our price target unchanged. Reiterate Overweight,” said JPMorgan in its December 14 note to investors.