Paytm’s stock has lost more than 60% of its value since its peak, while Nykaa’s stock has lost 42% of its value since its peak. Paytm’s shares slid 2.2 percent to an intraday low of Rs 815.10 today, while Nykaa’s stock fell 4.4 percent to Rs 1337.45.
As the stocks of newly-listed tech platforms continued to decline, One 97 Communications Ltd, Paytm’s parent company, and FSN E-Commerce Ventures Ltd, Nykaa’s parent business, hit new record lows on Monday. Paytm’s stock has lost more than 60% of its value since its peak, while Nykaa’s stock has lost 42% of its value since its peak. Paytm’s shares slid 2.2 percent to an intraday low of Rs 815.10 today, while Nykaa’s stock fell 4.4 percent to Rs 1337.45. ICICI Securities initiated coverage on Paytm shares with a Buy rating and a target price of Rs 1,352 per share, despite the selloff. At a target price of Rs 1,460 per share, Goldman Sachs confirmed its Buy recommendation for the stock.
Paytm’s stock is down because markets aren’t as bullish as they were last year, and the loss-making company is facing a sell-off amid market corrections, according to Vishal Wagh, Head of Research at Bonanza Portfolio. He also said that the stock is down due to the projected IPO of state-run Life Insurance Corporation, which could result in a liquidity shortage.
ICICI Securities launches coverage of Paytm with a ‘Buy’ rating.
ICICI Securities has begun coverage of Paytm stock, predicting a contribution margin of over 40% by the fiscal year 2024 and 46% by the fiscal year 2026, despite the selloff. According to the brokerage, with this contribution margin, there is a chance that EBITDA will become positive after the fiscal year 2026.
“Paytm necessitates a distinct evaluation and assessment, especially given: 1) Management’s high growth aspirations, which necessitate significant investments and cash burn. 2) Evolving business model (established leadership in payments, but financial services monetisation is still in its infancy). 3) A highly competitive environment with minimal switching costs and leading players with deep budgets stepping up their game. 4) There are regulatory uncertainties, with some favorable and a few unfavorable results, according to the brokerage.
Goldman Sachs maintains its ‘Buy’ rating, predicting a 75 percent gain in the stock.
Goldman Sachs maintained its Buy rating on the Paytm stock and kept its target price constant at Rs 1,460 per share, representing a 75 percent upside. According to the brokerage, the current share price represents an appealing entry point into India’s largest and fastest-growing fintech platform.
“We see Paytm’s risk-reward is skewed to the upside, with 151 percent upside in our bull case versus 2% downside in our bear case; our analysis suggests the stock is now pricing in significant regulatory, competition, and execution headwinds, which we view as unwarranted,” it wrote in a note on Monday. “Paytm trades at c.6x FY23E EV/Sales, a c.15 percent discount to global fintech peers; nonetheless, Paytm’s revenue growth, at 35 percent FY22E-25E CAGR, is stronger than global peers’ at 28 percent,” the report continued.
Platforms that are based on technology are being sold off.
Nykaa‘s parent company’s stock has dropped from 52-week highs of Rs 2,574 per share. On Monday, stock indices fell for Zomato Ltd, Cartrade Tech Ltd, and PolicyBazaar’s parent company, PB Fintech Ltd. The stock of Zomato is down 2.85%, that of PB Fintech Ltd is down 2.33 percent, and that of Cartrade Tech is down 3%.
Shares of tech-led platforms were overvalued when they were listed, but as reality sets in, they are now being valued appropriately, according to Milan Vaishnav, CMT, MSTA, Consulting Technical Analyst and founder of Gemstone Equity Research & Advisory Services.