Alibaba exits India, offloads remaining 3.4% Paytm stake

Chinese firm had sold 3.1% stake in fintech giant in Jan.

Paytm shares slumped close to 9% on Friday after Chinese e-commerce giant Alibaba offloaded its entire holding in the online payments aggregator.According to data from NSE, Alibaba sold 21,431,822 shares of Paytm’s parent One97 Communications in a bulk deal on Friday, translating to about a 3.4% equity stake. Shares of One 97 tanked 8.75% on the BSE and 7.82% on the NSE. The company saw a Rs 3,520 crore wipe-out in market capitalisation, according to data.

Alibaba had, in January, already pared 3.1% of its 6.26% holding in Paytm. The Chinese company has been exiting its India investments, having already offloaded its stakes in Zomato and BigBasket earlier.

The development brought a halt to the rally in Paytm shares. The stock has gained 3.77% in the last three months. It, however continues to trade below its IPO price of Rs 2,150.Shares had rallied more than 18% this week, following Paytm’s Q3 results announcement last week. The company recorded a 42% y-o-y rise in revenue from operations to Rs 2,042 crore, and an Ebitda before ESOPs of `31 crore. Net loss reduced by 50% y-o-y to Rs 392 crore.

According to its business update for January, the payments aggregator reported average monthly transacting users of 89 million, a 29% y-o-y rise. Similarly, merchant payment volumes rose 44% y-o-y to `1.2 trillion. It also disbursed `3,928 crore of loans in value, and 3.9 million in volume.

A note by YES Securities said the loan distribution business was the key driver in enhancing revenue and margin. The brokerage maintains its ‘Neutral’ rating on the Paytm stock with a revised price target of Rs 600. “We value Paytm at 3.9x its FY24 P/S (price-to-sales) to arrive at our price target of Rs 600,” said the note.

In a note to shareholders, Paytm founder Vijay Shekhar Sharma highlighted this was made possible because of the focused execution by the team. “The team was asked to focus on growth with quality revenues that contribute to the bottom line. We have achieved this milestone without losing sight of growth opportunities and keeping all compliances as well as risk factors under a strict watch,” he stated in the letter.Vaishali Parekh, vice president (Technical Research), Prabhudas Lilladher, said the company’s stock is still above the “significant 200DMA level of 630 and further below has the important 50EMA level of 565, which shall be the crucial support zone”. “A decisive break above the 740 resistance zone would trigger further upside movement with the next target of 845 visible. As far the stock is above the 200DMA, the trend will remain intact with a positive bias. At the same time, with a decisive breach below the 50EMA level of 565, the trend will turn somewhat weak,” Parekh said.

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