One 97 Communications, the parent company of digital services brand Paytm, lost more than 11 percent on Tuesday, setting a record low of Rs 474 on BSE.
Analysts said Paytm was battered after reports emerged that competition in the fintech sector will intensify, with Jio Financial Services entering the field of the likes of Paytm and PhonePe.
Business Standard quoted Macquarie Research on Tuesday that Jio Financial Services (JFS), owned by Reliance Industries and about to be spun off and listed, could become India’s fifth-largest financial services company.
“Paytm can feel the heat coming from Jio Financial services that would enter the business model of Paytm, PhonePe and even Bajaj Finance. This is an alarming comment for the space,” said Prashanth Tapse, Research Analyst and Senior Vice President of Research, Mehta Equities.
After opening weak Tuesday, the stock fell to a record low during morning deals. It attempted to recover somewhat from low levels, but sentiment remained weak.
Paytm has been disappointing investors since its IPO last year. Last week, early investor Softbank had sold a 4.5 percent stake at a price of Rs 555 – Rs 601, at a discount. The largest investor to have sold its holding after such setbacks has weakened sentiment on this counter, said Rahul Sharma, Research Head, Equity 99.
Analysts noted that an oversupply of stocks in the market weighed heavily on Paytm. A large supply of shares comes from pre-IPO placement investors and non-promoter investors, analysts added.
SEBI rules require pre-IPO investors to hold the shares post-IPO for six months to a year after the IPO. This lock-in period ended on November 15.
“Markets are not respecting the valuations of not-for-profit companies, which are not warranted at this time,” said Prashanth Tapse – Research Analyst and Senior Vice-President, Research – Mehta Equities.
Paytm was listed on November 18 last year. Compared to the IPO prices of Rs 2,150 per share, investors have suffered huge losses as the share is trading at Rs 483.
Other new-age stocks, listed in November-December last year, are suffering the same fate in the market today.
Fashion retailer Nykaa is trading at Rs 177.30, down 3.41 percent. Policy Bazaar is trading more than 1 percent lower at Rs 407.25.
The lock-in period in both stocks has expired.
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