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Digital payments firm Paytm saw its stock decline markedly after a shareholder offloaded 19.20 million shares.
Paytm shares suffered an 8.8% decline on Thursday following a series of block deals recorded by parent One97 Communications Ltd. According to reports, roughly 19.20 million shares or a 3% stake in the digital payments and financial services platform changed hands. The monetary value of the recent sale is around $125 million. Reports also stated that the likely seller in the Paytm block deal is Alibaba Group affiliate Ant Financial. As of September last year, Ant Financial held 164.42 million shares, or a 24.88% stake, in Paytm. Morgan Stanley (NYSE: MS) reportedly advised Alibaba on the deal.
The recent decline in Paytm shares marks the steepest plunge since November 22nd. The company’s stock was trading at Rs 528 a share as of press time. In addition, Paytm was trading down 5% from its previous close on the Bombay Stock Exchange (BSE). Before this development, the company’s stock had accrued 15% since December 26th. It traded up in 12 out of the last 14 sessions in that same period.
Goldman Sachs (NYSE: GS) estimates that Antfin Netherlands Holding procured Paytm shares between 2015 and 2019. Furthermore, the average stock price was Rs 300 a share during this acquisitional period. Meanwhile, the Alibaba Group-affiliated organization also invested in Paytm in 2015 at an average Rs 330 cost of acquisition. As of the end of September 2022, Alibaba held a 6.26% stake in the Indian “pay through mobile” initiative.
Other Supporting Details to the Paytm Shares Decline Report
On Monday, Paytm reported to exchanges the disbursement of 3.7 million loans valued at Rs 3,665 crore in December. This development represents an on-year jump of 330% and a 357% disbursement climb for the December quarter.
With total disbursements for the December quarter at Rs 9,958 crore, the number of monthly transacting users also spiked 32% to 85 million. This figure stood at 65 million a year ago.
Paytm’s processed gross merchandise value experienced a 38% surge year-over-year to Rs 3.64 lakh crore last December. In addition, the Indian digital payments platform also added one million payment devices between October and December. Furthermore, the number of subscribed merchants for payment devices reached 5.8 million in December 2022.
JPMorgan Chase & Co (NYSE: JPM) previously weighed in on Paytm’s approved share buyback scheme last December. JPMorgan wrote in a December 14th note to investors:
“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.”
The Paytm board approved the buyback of shares worth Rs 850 crore, or $103 million, via the open market route. The number of shares repurchased could total 10.5 million at the optimum buyback price of Rs 810.