Pre-IPO investors lock-in expiry ends: Why One-97 Communication-backed Paytm shares didn’t see much impact – what experts say

Paytm share price: About 86 percent of Paytm's shareholding, or about 55.6 crore shares, were to be released from the anchor lock-in IPO period.

Paytm share price: Morgan Stanley has maintained an Equal weight rating and has set a target price of Rs 695 apiece.

Paytm share price: As the anchor investors' lock-in period ends today, One97 Communications (Paytm) share price declined by around 2 per cent on the exchanges. The stock quoted at Rs 624.70 apiece on the NSE, while it concluded at Rs 626.10 apiece on the BSE at the market close Tuesday.

About 86 percent of Paytm's shareholding, or about 55.6 crore shares, were to be released from the anchor lock-in IPO period, as per the Zee Business research report.

Paytm made a tepid stock market debut on November 18, 2021. The Rs 18,300 crore-IPO (initial Public Offer) was launched in November with a price band of Rs 2,080-2,150 apiece. Paytm share price got listed at Rs 1,950 apiece levels on the exchanges – 9 per cent lower than the issue price.

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Share Price History

The stock has corrected over 70 per cent from its issue price, while it has tumbled nearly 60 per cent in the last one year. Conversely, the scrip reported over 5.5 per cent growth in the last six months.

In the past six months, the stock has fluctuated between Rs 586 per share to Rs 843 per share. In August, the stock had climbed approximately Rs 800 apiece. It has made a 52-week high of Rs 1,961.05 on November 18, 2022, and has a market cap of Rs 40,630.09 crore.

Brokerage’s View

Morgan Stanley has maintained an Equal weight rating and has set a target price of Rs 695 apiece.

According to the brokerage firm, Gross Merchandise Value (GMV), a metric that measures the total value of sales over a certain period of the company, remained strong even though it moderated year-on-year (YoY).

The brokerage further stated that Paytm’s loan disbursement grew by 9 per cent month-on-month (MoM), helped by improving ticket size.

Meanwhile, other global brokerages such as JP Morgan, and Goldman Sachs being bullish on the stock on long-term, expect Paytm to achieve its breakeven target ahead of September 2023.

What experts say

According to experts, Paytm share price has not seen any larger impact after the pre-IPO investors lock-in expires today.

“Paytm’s Lock-in expiry had no impact on the share price as the company’s robust performance continues to impress investors.” Avinash Gorakshakar, Director - Research, Profitmart Securities said in his comment on Paytm.

He added that the investors like Warren Buffet, and SoftBank have placed long-term bets on Paytm. Moreover, SoftBank CEO (chief executive officer), Masayoshi Son has also recently said he is not hastening his exit, the market analyst Gorakshakar said in his comment.

The marquee investors of Vijay Shekhar Sharma-led digital company are in no hurry to sell, said Rahul Sharma, co-founder, Equity99 Advisors.

Click here to know more about Paytm IPO

Q2 Performance

One97 Communications-backed Paytm, on November 7, 2022, reported a widening of consolidated loss to Rs 593.9 crore in the July-September quarter of the financial year 2022-23 (Q2FY23) against a loss of Rs 481 crore in the same period a year ago.

While the company’s consolidated revenue from operations increased by around 76 per cent to Rs 1,914 crore during the second quarter of FY23 from Rs 1,086.4 crore in a year-ago quarter.

Profitability

The management in the recent concall has expected the company to hit break-even in EBITDA terms by the second quarter of the financial year 2022-23 (Q2FY23).

Recently Paytm CEO Vijay Shekhar Sharma said, “We are now excited about the next year of our journey, as we get close to EBITDA profitability and free cash flow generation.”

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