Paytm Cracks Nearly 9% As 1.92 Cr Shares Exchange Hands in Block Deal; Buy, Sell or Hold?

Paytm Share Price: Paytm shares fell 8.86 per cent in Thursday’s intraday trade as nearly 2 cr shares (3.1 per cent equity) worth Rs 1,126 cr changed hands at an average Rs 540 per share. BSE data showed that a large block deal took place in the second half of the day leading to a spurt in volume by over 19.25 times.

Alibaba Group affiliate Ant Financial is likely to have sold 2 crore shares in the block deal, according to reports.

The large deal in Paytm comes just after 0.5 per cent of Nykaa’s equity had exchanged hands in a large trade earlier this morning.

New-age companies like Paytm, Nykaa, PB Fintech and others saw a slew of block deals over a two-month period across November and December as investors sold stake post the end of their respective lock-in periods.

The stock is down for the first time after a nine-day gaining streak. Till yesterday, in the year 2023, this stock has seeing good growth. During the first 8 trading sessions of 2023, a gain of about 7 per cent was seen in this stock.

What Should Investors Do?

Paytm is likely to report a 46 per cent year-on-year (YoY) rise in revenues at Rs 2,125.70 crore compared with Rs 1,456.10 crore in the year-ago quarter, said ICICI Securities in a report. This brokearge expects Ebitda loss for Paytm declining to Rs 488.10 crore.

Global brokerage firm JP Morgan had maintained its ‘overweight’ rating on Paytm with a target price of Rs 1,100, whereas Morgan Stanley remains ‘equalweight’ on the stock with a target price of Rs 695.

Vaishali Parekh, Vice President – Technical Research, Prabhudas Lilladher Pvt. Ltd, said: “The stock recently has given a decent pullback from the low of 440 zone and has shown resistance near 583 levels from where it has witnessed some profit booking to slip to some extent below the significant 50EMA level of 555. The bias would turn weak once it breaches the zone of 530 levels and one can EXIT from their long position. Further ahead, a decisive move past 600 zone on the upper side would improve the trend once again and can anticipate for fresh upward move with next resistance visible near 660 levels.”

Paytm Buyback

Paytm parent One97 Communications on Tuesday had said that the board has approved buyback of shares worth up to Rs 850 crore through the open market.

The shares will be bought back at a maximum price of Rs 810 apiece, it said in a release. The indicative maximum number of shares that will be bought back is 1,04,93,827 shares, representing about 1.62 per cent of the paid-up share capital of the company.

The company will utilise at least 50 per cent of the amount set aside for the buyback of shares. On December 9, the company had announced that the board will consider a share buyback.

Ravi Singh-Vice President and Head of Research, ShareIndia, said: “Paytm’s buyback action has raised skepticism regarding the company’s growth prospects and investors are worried about the success of the buyback which seems questionable. In this scenario, the stock of Paytm may witness more selling pressure as Investors would be exiting their holdings and can touch the levels of 480 in coming trading sessions.”

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