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    Why are investors dumping Paytm shares? Elixir’s Dipan Mehta explains

    Why are investors dumping Paytm shares? Elixir’s Dipan Mehta explains

    Why are investors dumping Paytm shares? Elixir’s Dipan Mehta explains
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    By CNBCTV18.com  IST (Updated)

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    Paytm parent One97 Communications' shares continue to hit record lows. On Tuesday, the Paytm stock price fell below the Rs 650 mark for the first time, taking its discount to the issue price of Rs 2,150 to more than 71 percent. Dipan Mehta, Director at Elixir Equities, told CNBC-TV18 he is "not very clear on the road to profitability for Paytm". Here's what the market expert thinks about the growth prospects of new-age companies such as Paytm.

    A chain of record lows in Paytm parent One97 Communications' shares has forced investors to question once again the growth prospects of new-age companies. Dipan Mehta, Director at Elixir Equities, told CNBC-TV18 he is "not very clear on the road to profitability for Paytm".
    "Paytm has got its fingers in so many pies and there are so many moving parts that it is difficult to get a handle on what the exact business model presently is and how it will evolve over a period of time and when exactly it will come back into profitability," he said.
    Paytm shares hit a fresh record low on Tuesday, sliding below the Rs 650 mark for the first time. The Paytm stock fell as much as 8.7 percent to Rs 616.6 on the BSE, taking its discount to the issue price of Rs 2,150 to more than 71 percent.
    The sustained selling pressure in Paytm comes at a time when the RBI has barred its payments bank unit - Paytm Payments Bank - from taking on new customers and ordered a comprehensive audit of its IT systems.
    Why are investors punishing Paytm now?
    Mehta is of the view that Paytm faces increased competition across each of its segments. As many fintech players have entered the market, existing players are launching related applications in a bid to curb their market share gains, he explained.
    "There is no clarity as to what the business model will be, which are going to be the major growth drivers and what the road to profitability is. Until we don't have such a clear vision on the company, the stock price will remain pretty much pinned down," he said. 
    The banking regulator has cited "material" supervisory concerns observed in One97 Communications' payments bank, without elaborating.
    Paytm has said it is taking immediate steps to comply with RBI directions, including appointing an IT auditor. The digital payments company believes the ban will not have a material impact on its overall business.
    In January, market veteran Shankar Sharma told CNBC-TV18 one should not be surprised if shares of new-age companies fall 80-90 percent by the end of 2022.
    Check out our in-depth Market Coverage, Business News & get real-time Stock Market Updates on CNBC-TV18. Also, Watch our channels CNBC-TV18, CNBC Awaaz and CNBC Bajar Live on-the-go!
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