Buy the fear! Mutual funds, FPIs hiked stake in Paytm in troublesome March quarter

Retail investor's shareholding went up by 168 bps from 12.85% to 14.53% sequentially while Non-Resident Indians (NRIs) also saw an increase from 0.67% to 0.85%.

The Foreign Direct Investment (FDI) shareholding in Paytm fell 500 bps to 60% as compared to 66% in the last quarter, primarily due to a stake sale by SoftBank. The shareholding by SVF India Holdings (Cayman) Limited (SoftBank) has decreased by 5% from 6.46% to 1.40% in Q4FY24.

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The company is yet to release its March quarter earnings. In the third quarter of the fiscal, Paytm’s revenue from operations saw a growth of 38% YoY to Rs 2,850 crore, and its EBITDA before ESOP stood at Rs 219 crore as compared to Rs 153 crore in Q2FY24 (excluding UPI incentives). The company’s PAT improved by Rs 170 crore YoY to Rs 222 crore.

During the March quarter, shares of Paytm fell 36.6%. The stock has been under stress ever since the RBI issued an order asking Paytm Payments Bank to stop new credit and deposit operations, top-ups, fund transfers, and other such banking operations. The move led to a massive crash in share prices amid downgrades by brokerages.

Earlier in the week, Bank of America (BofA) resumed its coverage on Paytm with an 'Underperform' rating and a target price of Rs 400.

Earnings recovery and re-rating could be 2-3 quarters away, BofA said, expecting the estimates to bottom by Q1FY25 as the full impact of the three-month ban on business would become visible.

The stock was under pressure today and fell up to 4% after Paytm Payments Bank CEO and MD Surinder Chawla tendered his resignation.