Paytm share price crashes after Softbank stake sale: Check analysts’ outlook

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Paytm share price

Paytm share price crashed 11% on Thursday after a Reuters report said that SoftBank Group Corp has cut stake in the company. Here are the details: .

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Paytm shares have fallen by 60% in the year so far. 

SoftBank Group Corp cuts its stake in Paytm: Details

  • Reports on Wednesday suggested that SoftBank will sell its stake in One97 Communications Ltd through a $200 million block deal.
  • SoftBank had a 17.5% stake in Paytm as of Sept 30. The shares were expected to be offered to institutional investors at Rs 555 to Rs 601.45.
  • SoftBank sold 29.5 million shares, which is about a 4.5% stake in the company via a single block on the NSE today. It will fetch them $200 million approximately.
  • The sale follows the end of one-year mandatory lock-in for pre-IPO investors in Paytm. As the lock-in has expired, 85.76% of the outstanding shares are now free to trade.
  • SoftBank has invested $1.6 billion into the company over the years. It is among its biggest investments in India. At Paytm's current share price, the 17.5% stake SoftBank held in the company before Thursday's share sale was worth only about $900 million.

Also read: Paytm Q2 net loss widens to Rs 571 crore: Key highlights

Paytm share price: Brokerage radar

Last week following the earnings, analysts had pointed out that the stock could come under pressure due to the lock-in period expiring on November 15th. Check our detailed report on the lock-in period. 

Earlier, CLSA maintained its ‘Sell’ call for Paytm with a target price of Rs. 650 mainly due to higher Opex margin for the quarter and pre-IPO investor lock-in opening on 15th November 2022. 

Morgan Stanley has retained an ‘equal weight’ rating on the stock with a target price of Rs. 785 as the revenue for Q2 increased as expected with strong growth of GMV mainly due to an increase in loan disbursal. The research firm noted that an improvement in the contribution margin on a QoQ basis while the Adj margin dropped 9% bodes well for Paytm.