Paytm Shares Plummet 5% For The 3rd Day As SoftBank Affiliate SVF Trims Stake; What Analysts Say?

Paytm-operator One97 Communications Ltd shares took a 5% nosedive in early trade on Thursday following a reduction in stake by SoftBank affiliate, SVF India Holdings Ltd. The latter slashed its stake from 5.01% to 2.83%, selling 1.38 crore shares through open market transactions between January 23 and February 26, according to Bloomberg reports.

The impact on Paytm's stock was immediate, as it hit the 5% lower circuit, tumbling to Rs 385.90 apiece-its lowest level since February 23. Subsequently, it recovered from the lower circuit, trading 3.48% lower at Rs 392.05 apiece. This decline starkly contrasted with the meagre 0.15% drop in the NSE Nifty 50, marking a concerning trend.

Over the past 12 months, Paytm shares have faced a 34.03% decline, raising eyebrows among investors. The total traded volume during the day stood at 1.0 times its 30-day average, with the relative strength index reported at 35.80, indicating a bearish sentiment.

Bloomberg data reveals that among the 14 analysts tracking the company, six maintain a 'buy' rating, three recommend a 'hold,' and five suggest 'sell.' The average 12-month analysts' price target implies an upside potential of 73.3%.

This marks the third consecutive session where Paytm shares traded in the red, and at 9:30 am on February 29, the fintech stock hovered on the 5% lower circuit at Rs 385.90 on the National Stock Exchange (NSE). The downward trend continued from the previous session, where the stock witnessed a 5% decline.

Investor apprehension persists despite the recent resignation of Vijay Shekhar Sharma as part-time non-executive chairman and board member at Paytm Payments Bank. The Paytm stock faced significant headwinds following the Reserve Bank of India's crackdown on Payment Payments Bank on January 31, resulting in a nearly 60% plunge. Though the stock saw a partial recovery by hitting the 5% upper circuit for several consecutive sessions, the lingering uncertainties are affecting investor confidence.

Despite regaining some losses and trading 20% above the 52-week low of Rs 318 reached on February 16, Paytm shares remain approximately 50% below the January 31 closing price of Rs 761.20. The current scenario has left analysts and investors closely monitoring the stock's trajectory, pondering the implications of SVF India Holdings' reduced stake and the broader market dynamics.

As of 1:25 pm, Paytm shares continued to face selling pressure, trading with nearly 4% cuts at Rs 391.20 per share on the National Stock Exchange (NSE).