Friday, September 22, 2023

Mutual funds are increasing their stake in Paytm

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It’s been just over a year since India pioneered mobile payments and Quick Response (QR). Paym made its debut on the stock exchange and the company made a big impression. The initial public offering (IPO), the largest in the country’s history, attracted the attention of investors from far and wide. Paytm’s impressive growth has piqued the interest of savvy investors, both retail and institutional, who are clamoring to add more Paytm stocks to their portfolios.

As the fintech company continues to make significant progress toward operational profitability, investor confidence in the Paytm story and the company’s long-term potential has become stronger than ever.

The company’s latest shareholding pattern for the quarter ended December shows mutual funds increasing their holdings by 0.47 percent to 1.73 percent. Two new mutual funds entered the stock, bringing the total number of mutual fund shareholders in Paytm from 19 to 21 in the December quarter. Meanwhile, more private investors have also jumped on board, with their share holdings increasing by 3 percent to 9.7 percent. More than 70,000 new investors joined during the quarter, bringing the total number of private shareholders to around 12 lakh.

These developments are a clear indication that more Indians believe in Paytm’s ability to be profitable without compromising growth. The increase in shareholding from domestic investors is a sign of confidence in the company’s future prospects.

Global investment company Goldman Sachs expects Paytm’s earnings before interest, taxes, depreciation and amortization (Ebitda) to be positive in the March quarter, two quarters ahead of September 2023 estimates and corporate guidance. revised upwards to Rs 1,120. The company has stated that the current share price continues to provide an attractive entry point into India’s largest and one of the fastest growing fintech platforms.

The increase in shareholding from domestic investors is also a positive sign for the Indian economy as it shows that more and more Indians are investing in the country’s burgeoning fintech sector. An increase in retail shareholding can bring a number of benefits to a company. One of the main benefits is increased liquidity, which can help stabilize the share price and improve overall market sentiment. Private shareholders also typically have a long-term investment horizon and are more likely to hold on to their shares, making the company more attractive to investors.

The whole DBI shareholding in Paytm fell from 71.49 percent to 66.12 percent, mainly due to SoftBank divesting a 4.53 percent stake. The Japanese Conglomerate, via his Vision Fund, still owns 12.92 percent of Paytm. Meanwhile, the holding of foreign portfolio investors (FPI) in the company has risen 0.91 percent to 6.68 percent. The number of FPIs holding Paytm shares increased from 88 to 128 in the third quarter, representing a net addition of 40 investors.

As a pioneer in India’s fintech revolution, Paytm has been at the forefront of the country’s tech-driven shift to a cashless economy. The Paytm Super app has become a concept synonymous with convenience and ease of use.

Paytm is expected to post another strong quarter when it releases Q3 (Q3) results. Meanwhile, the Q3 operating performance update shows strong growth in the number of monthly transaction users, loan disbursements, and device usage. According to available data, eight of the 12 analysts who track the company have a buy rating. Paytm is also included in Goldman Sachs’ Asia (ex-Japan) ‘Conviction List’ of stocks with high yield potential and rated as ‘buy’.

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