Why Paytm Share Price is Rising

Paytm shares have been under pressure since the IPO (Initial Public Offers) debuted in November 2021. The market value of the company has eroded by Rs 1 tn since it listed on the bourses.

It was due to a series of events, including the RBI prohibiting new client on-boarding, low ratings by brokerage companies, increasing interest rates, and its high valuation.

However, in the last two weeks, the winds have changed for Paytm.

The stock price has risen 24% in two weeks.

So, what has caused this turnaround for Paytm?

#1 Loan disbursement

In an exchange filling on 15 June 2022, Paytm announced that the platform's lending division saw a loan disbursement of Rs 230 bn. This was a growth of 471% year-over-year with 5.5 m loans disbursed between April and May 2022.

The company's Average Monthly Users (AMU) also increased 48% YoY to 74.3 m users for the two months ended in May 2022. It was mainly due to the Paytm supper app. Paytm super app is a one-stop destination for diversified payment needs.

This led to a rise in the share price by 3% to Rs 624 on the day of the announcement.

Paytm has volumes across the Paytm wallet, Paytm payments bank accounts, net banking, credit and debit cards, and UPI.

In the financial year 2022, the company reported a 105% growth at Rs 1.9 tn across these segments from Rs 960 bn in 2021.

Paytm also added more than 2 m offline devices during the year 2022.

Merchant stores in the country saw the deployment of 3.4 m devices. This increase in device usage raised the number of eligible merchants for loans on their platform.

#2 Surging NASDAQ index

Over the last 5 days, the Nasdaq 100 index has risen 3.1%. Tracking this rise, tech stocks in India have also been on an upswing.

As a result, shares of Paytm rose 12.6% in the last 5 days.

What is the Nasdaq 100?

The Nasdaq 100 index comprises of 100 of the largest, most actively traded US companies listed on the Nasdaq stock exchange. Nasdaq 100 index is a tech-heavy index.

The technology sector has 49.5% of exposure to NASDAQ 100. This is the reason the NASDAQ 100 index reflects the overall sentiment in the technology sector.

In May 2022, the index fell 23% from its 52-week high. This was due to an increase in interest rates by the US Federal Reserve.

Due to the fall in the Nasdaq 100, Indian new-age technology stocks such as Paytm, Zomato, and Nykaa fell 40-71%.

Annual Results

In its latest result, Paytm recorded a revenue jump of 77% in the financial year 2022 to Rs 49.7 bn from Rs 28.1 bn in the previous year.

However, the company's net loss widened in the financial year 2022 to Rs 7.6 bn from Rs 4.4 bn in 2021.

This reduction in bottomline was due to a rise in payment processing charges, marketing costs, and employee benefit expenses.

How Paytm shares have performed recently

Shares of Paytm have risen by 10.3% in a month and 24% in last two weeks.

However, the stock is down over 45% in 2022 and 55% in the last year.

Paytm shares touched a 52-week high of Rs 1,955 on 11 November 2021 and a 52 -week low of Rs 510 on 12 May 2022.

It currently trades at PBV (Price to Book Value) of 2.9.

About Paytm

Paytm is India's leading financial services company that offers payments and financial solutions to consumers.

Paytm is a wholly-owned subsidiary of One97 Communications Limited. It is an Indian-based mobile internet company.

Paytm is a digital and mobile commerce platform. Its business offerings include mobile payments and mobile marketing. The company's segments include Paytm, Commerce, Cloud, and others.

Paytm became India's biggest investment platform within its first year and is now one of the largest contributors to the new Systematic Investment Plans (SIPs).

New-age tech companies such as Paytm have profits awaiting them in long run. But at present, they are burning cash.

For more details about the company, you can have a look at Paytm's factsheet and quarterly result.

Also check out the below video where Co-head of research at Equitymaster, Rahul Shah analyses Zomato and Paytm and says which is a better buy.

You can also compare Paytm with its peers.

Paytm vs Policy Bazaar

Paytm vs Zomato

Paytm vs Nykaa

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