Paytm shares tank 10% in morning trade on Softbank stake sale

Shares of One 97 Communications Ltd (Paytm) tumbled about 10% to ₹541 apiece on the BSE in Thursday’s opening deals as a unit of Japan’s SoftBank Group Corp offered to cut its stake in the company. About 29.5 million shares, the equivalent to 4.5% of the company’s equity capital, were traded in a single block on the NSE, according to data compiled by Bloomberg.

The trade pulled down shares of Paytm to their biggest plunge since July 29. Reports on Wednesday suggested that Japan’s SoftBank will sell a third of its stake in One97 Communications Ltd, the owner of the Paytm payments app, through a $200 million block deal.

SoftBank, which owns 12.9% of Paytm, plans to sell 29 million shares or 4.5% of the fintech company on Thursday, suggested a report by Mint on Wednesday. The shares are being offered to institutional investors at ₹555-601.45. If completed, the sale will fetch SoftBank at least ₹1,628.9 crores or $200 million, the report added.

The sale follows the end of one-year mandatory lock-in for pre-IPO investors in Paytm. Stocks often fall after lock-ups expire, as investor selling puts downward pressure on shares.

Paytm shares made their stock market debut in November last year and the scrip has declined nearly 65% since its listing amid the global tech slowdown that started last year. Other new-age tech stocks, including Zomato, Nykaa, and PB Fintech – which went public last year, have also had tough months so far on the stock market and have already fallen below their respective issue prices.

Paytm’s a net loss in the July-September period swelled to ₹571 crores as compared to ₹473 crores a year earlier, however, narrowed from ₹650 crores in the previous quarter of June 2022. Meanwhile, its consolidated revenue from operations increased by about 76% to ₹1,914 crores during the reported quarter, buoyed by the acceleration in the lending business, a rebound in payment services to merchants, and an uptick in cloud revenue, from ₹1,086 crores in the corresponding quarter of the previous fiscal.

Paytm’s chief executive Vijay Shekhar Sharma in a letter to shareholders earlier this week said that the company is on the right path to profitability and free cash flows, after its recent quarterly reports which showed strong operating leverage and reduction in EBITDA losses.

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