Updated: Nov 21, 2022
Foreign portfolio investors (FPIs) have sold 29.7 million Paytm shares, accounting for 44% of their stake in the company, in less than a year after its initial public offering (IPO)
What happened: Paytm was India's largest-ever IPO at the time, was sold at an issue price of Rs 2,150, and has been on the decline since listing, leaving investors bleeding.
The stock is down more than 60% from its IPO issue price, reflecting investor disdain for loss-making companies.
After smart money fled Paytm, retail investors swooped in with both hands which can be witnessed with retail shareholding increased from 2.79% at the time of listing to 6.37% at the end of September.
Why does it matter: Another short-term overhang on the stock is the mandatory one-year lock-in period for pre-IPO investors, which expires in mid-November.
Goldman Sachs expects Paytm to deliver 50% revenue growth in the coming quarters as it transitions from a payments-only business to one with a solid financial services portfolio, having recently set a 12-month target price of Rs 1,100.
By numbers: A day before the stock was listed amid much fanfare, Paytm had 127 foreign portfolio investors owning 6.71 crore shares of the company, representing 10.37% of the company.
FPIs sold 44% of their holdings in September, according to the most recent shareholding pattern, and now own only about 3.74 crore shares.
According to the data, the number of FPIs has since been reduced to 88.
Morgan Stanley Asia (Singapore), which held a 1.21% stake in the company during its IPO, is no longer listed as a shareholder.
What next: Despite the negatives, Paytm maintains strong traction in its financial services vertical, owing to the higher average ticket prices and improved loan disbursal run-rate.
Revenue from ‘payment services to consumers’ jumped 55% year-on-year to Rs 549 crore, while payment services to merchants went up by 56% to Rs 624 crore YoY.
Basically: In less than a year, foreign portfolio investors (FPIs) sold 29.7 million Paytm shares, accounting for 44% of their stake in the company.