Paytm is a financial company in India with more than 1 Lakh market value after IPO launched. Currently stock is trading at 400 levels steep fall from 1000.
RBI restrictions on Paytm arms Paytm Payment Banks due to policy violation, but Paytm closed its bank subsidiary. Investors are confused about the company’s future because of business losses and negative sentiments.
We give you a detailed overview of what to do with stock according to the current financials and future plans of the company.
Financial Conditions After RBI Restrictions
They have a market cap of 25,000 Crores now till 205 book value. 75,000 Crores lost in last one year, Company’s revenue increases in last 9 years from 450 crores to 7,700 crores that is 1600% growth.
But net profit is not stable they made a loss of 1500 crores in the financial year 2015-2016 and in FY23-24 they lowered their losses but still very high.
Book value also falls from 13,000 to 205 in 2024 which means they have negative growth in book value terms. Total asset to total liabilities is good, they have 17,965 total assets and 4,900 in total liabilities.
EPS, ROE and Price-to-earnings ratio all are in negative because the company was at a loss. If any company can’t generate net profit then most of their ratios are negative.
Mutual Funds and Foreign Institutions Increases Holding
In the September quarter, Foreign Institutions had a 60% holding in the company, but they showed positive belief in Paytm and increased their holding to 63% in the December quarter.
Mutual funds currently hold 5% shares in Paytm after such negative news. According to Motilal Oswal, ” Paytm will report new profit in Q4 is 500 Crores, that is double from last quarter”. Retail shows positive belief in Paytm and increased stake to 30% from 20%.
Will Paytm Recover From Current Levels in Future ?
Stock trading at 350- 430 levels from last 2 months, stock forming W patterns. The Breakout level for the stock is 445, it touched 2 times those level but fell from it due to high selling at that level.
Currently stock takes support at 390 prices but stock volume is dropping. The RSI index at 44 levels means a good signal for the stock.
After the breakout stock will go to 500 level, those who have invested already can hold but no new investment in stock at this levels. Once the company posts profit on a quarter basis then you should think about it.
Analyst Ratings on Paytm
Bank of America gave neutral rating on stock with target price of 400. BOA, ” sees many players like Reliance entering in the competition and Paytm already lose their brand value, they need to spend more money on marketing to get their position back in the market”.
Retail clients lose their trust on Paytm and shift Unified Payment Interface (UPI) transaction through GPay and PhonePe application. Paytm lost it’s position to Cred. Cred stood at 3 position after Paytm’s fall.
Jefferies gave a sell rating on the stock while CLSA maintained an outperform target. Macquaries said that the company lost their banking customer and that are very hard to gain, they gave a neutral rating.