Paytm shares fell 9% as Alibaba sold a 3% stake in a large block deal

New-age fintech One97 Communications NSE 1.76 % Shares of Paytm-running new-age fintech One97 Communications fell as much as 8.82% to Rs 528.35 today after China’s Alibaba Group sold a 3.1% stake in a block deal.
Alibaba, which held a 6.26% stake in Paytm at the end of September, sold a 3.1% stake in the company for a total of $125 million through a block deal at a price of Rs 536.95 per share, Reuters reported.
Last month Rs. Shares of Paytm, which announced an 850-crore share buyback plan, are trading below its IPO issue price of Rs. 2,150 has fallen about 74.5% so far.
The stock was the worst performer in the calendar year 2022. The average target price of 11 analysts, 8 of whom have ‘buy’ ratings, however, indicates upside potential of about 66%, Trendlyne data shows.
In a recent report, fintech will be a key beneficiary of India’s Rs 2600 crore UPI incentive program to promote RuPay debit cards and low-value BHIM-UPI transactions (P2M) for FY23, brokerage firm Morgan Stanley said.

“Apart from banks, Paytm should be the main beneficiary of the above. As per our estimate, Paytm would have received 5-7% of FY22 incentives, and assuming a similar share for FY23, this would add 3-5% to our contribution margin estimate (1% more than our pre-FY23 estimate). more) ,” the brokerage said.
Earlier in the month, the fintech company had reported in its quarterly update that the total value of loan disbursements grew 357% year-on-year to Rs 9,958 crore in the December quarter.

Paytm said “loans grew 117% year-on-year to 37 lakh and 137% year-on-year to 1050 lakh total loans in the three months ended December 2022.” The average number of monthly transaction users or MTUs was 850 lakh, registering a growth of 32% year-on-year.

“Alibaba’s sale of stake in Paytm could be good news for shareholders as it reflects declining Chinese stake in the company. It will benefit them in FDI and further ease investors’ concerns as the company is already heading towards profitability,” Avinash said. Gorakshakar, Chief Research Officer, Profitmart Securities said.
“Alibaba seems to be in the process of exiting India as it has sold stakes in key investments like BigBasket, Zomato and Paytm. This is positive for shareholders as it clears many regulatory hurdles. In Paytm’s case, the company has been delivering good business updates on pace of profitability,” he said.