Paytm Shares Jumps Over 8% After Falling For Two Days. Analysts Show Concern

At 13:53 pm, Paytm shares were trading on National Stock Exchange (NSE) at Rs 1471.20, up 8.21 per cent.

While Paytm shares have shown positive growth in the early trade today, however, it remains to be seen whether the digital payment firm will be able to sustain the volatility in the market. Many analysts feel that Paytm shares are unlikely to see robust growth considering the extreme unpredictability of the stock market.

On November 18, the shares of One97 Communications plummeted 27 per cent in their market debut, valuing the Ant Group-backed digital payments firm at around Rs 1.11 trillion. As a result of a fall in its valuation and disappointing market debut, investors lost wealth to the tune of Rs 38,000 crore, reported India Today.

Amid the sudden rise in Paytm’s shares, investors perhaps could be confuse whether to buy the stock or not. Here are views of stock market experts that one must take into consideration before planning to invest in the digital payment firm:

Macquarie Group

The global brokerage firm came out with a strong research note on Paytm’s business and expensive valuation, among other things. The brokerage valued Paytm’s stock at Rs 1,200 after criticising its expensive valuation.

"Paytm has been a cash-burning machine, spinning off several business lines with no visibility of achieving profitability. Unless Paytm lends, it can't make significant money by merely being a distributor," the brokerage said.

Aditya Kondawar, Chief Operating Officer, JST Investments

One of the factors weighing down on the stock is the fact that not many people know what exactly does Paytm do and how they are going to turn a profit. Paytm is not exactly a leader in any of the businesses that it runs. Paytm brand, Of course, is valuable with a strong customer base but current valuations have no margin of safety.

Gopal Agrawal, MD at Edelweiss Financial Services Ltd

The event in a way will nudge people to be cautious and not take the market for granted by blindly placing bets. A company’s story and prospects must be well understood by investors.

Ashutosh Sharma, Vice President at Forrester Research Inc.

The pandemic led to huge technology adoption in the country that got priced into the valuations of many technology companies. Is this the beginning of a downward trend? I don’t know. But going forward, investors will look cautiously on the risks and business future of tech companies.