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FPIs sell Paytm worth 150 cr

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.


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