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D-Street gives lukewarm response to Paytm: Should you hold, add or sell the stock?

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Paytm parent One97 Communications' shares extended losses after a weak debut in the secondary market on November 18. CNBC-TV18 spoke with experts on what they think of Paytm shares now.

D-Street gives lukewarm response to Paytm: Should you hold, add or sell the stock?
Paytm parent One97 Communications' shares extended losses after making a weak debut on Dalal Street. Digital payment platform Paytm's shares listed on stock exchanges at a discount of around nine percent compared with the issue price of its IPO, which saw a subscription of 1.9 times the shares on offer.
The Paytm IPO was the biggest of all time in India. One97's market debut was among the worst so far this year.

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Paytm Founder and CEO Vijay Shekhar Sharma told CNBC-TV18 that the listing day share price is not a true reflection of its business model, which people will take time to understand. "The crossover of finance and technology company models is something new," he said.
Lending is a fantastic opportunity for Paytm, Madhur Deora, President and Group CFO, Paytm, told CNBC-TV18. "It is growing very, very fast, and it is also very, very early for us," he said.
CNBC-TV18 spoke with experts on what they think of Paytm shares now:
Suresh Ganapathy, Macquarie Capital Securities:
“As a payment bank, they cannot lend, but of course, if they get a small finance bank, they can definitely lend. We are of the view that the probability of them getting a small finance bank would be relatively a bit lower. Of course, it all really depends upon what view the RBI takes on them. But this is our view currently.”
Ramesh Mantri, Director-Investments, White Oak Capital Management:
"Paytm is a verb, no longer just a brand. To say Paytm is to say make an online payment... The concerns are valid on disruptions because with the advent of UPI, clearly, wallets are becoming less valuable. At the same time, there are a different set of leaders that have emerged on the UPI stack which is PhonePe and Google. Clearly, while Paytm has been an absolute pioneer in digital payments space, it faces challenges with new disruptions, particularly UPI-led."
"India has already built the best payment stack. On a daily basis, our volumes are 80 percent higher than China on digital payments. Payments are difficult to monetise but a great funnel to acquire customers... Because it is a very high-frequency usage, it ends up being one of your top apps on your phone. So there is high customer engagement and then the monetisation model has to be around a lot of ancillary products in the financial services space and of course."
"Paytm also has a play into some of travel and booking facilities. So the monetisation model has to be in ancillary products apart from payments... Paytm will succeed if it executes well on selling other financial services products, and scales up banking, lending, insurance, investment products."
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