China's Alibaba Group Sells Existing Stake in Paytm
According to a report, one of Paytm's early backers, China's Alibaba Group, is believed to have sold a 3.4% stake in the fintech firm today, bringing its shareholding to zero.
Per the sources, 3.4% equity or 2.1 crore shares of Paytm's parent company One97 Communications changed hands today in a block deal in which Chinese multinational Alibaba sold its entire stake. Following the block deal, the stock fell 9% to a one-day low of Rs 646.
At the end of the December quarter, Alibaba owned 6.26% of Paytm and had sold about 3% of its stock on the open market in January.
Alibaba has been selling stakes in listed new-age technology companies in India as the value of its investments has plummeted. Earlier in November, the Chinese conglomerate sold a 3% stake in online food delivery aggregator Zomato.
Today's block deal by Alibaba punctuated Paytm's recent rally after it announced operating profitability in the December quarter.
The net loss for the third quarter of the new-age company was Rs 392 crore, down from Rs 779 crore the previous year. "With our focus on growth and a close eye on operational risk and compliances, I am very confident that we will soon achieve our next milestone of becoming a free cash flow generating company," Paytm CEO Vijay Shekhar Sharma said after the quarterly results were announced last week.
Paytm shares, which announced a Rs 850 crore share buyback programme last month, have fallen roughly 70% from their IPO issue price of Rs 2,150. However, the stock has gained around 19% in the last five days.
That according Trendlyne data, Paytm now has 8 buy recommendations out of 11 analysts covering the stock, with an average target price of Rs 915, indicating an upside potential of more than 34%.
The quarterly earnings report card even impressed Macquarie, which is known for its pessimistic outlook for Paytm. The global brokerage firm upgraded the stock twice and increased its target price by 80% to Rs 800.
"Our view at Rs 2,150 is different from our view when the stock is priced around Rs 600. Since our last target price cut, Paytm has positively surprised on the distribution of financial services revenue by a wide margin and has also managed to control overall expenses and charges," Macquarie analysts Suresh Ganapathy and Param Subramanian said.
Goldman Sachs set a price target of Rs 1,150, Citi set a target of Rs 1,061, and BofA Securities set a target of Rs 730.
Paytm reported in its monthly business update for January that its average monthly transacting users increased 29% year on year to 89 million. "We continue to strengthen our leadership in offline payments, with 6.1 million merchants now paying a subscription for payment devices, up 0.3 million from January 2023," the company said.