Despite a 27 percent discount, analysts advise against purchasing Paytm shares; the price correction has failed to persuade the public

On the BSE, Paytm shares began at Rs 1,955, down 9.07 percent from the IPO price. The dramatic drop in Paytm shares failed to persuade analysts, who are still hesitant to recommend the fintech company to investors after the stock dropped 20% on its first day of trading. The fintech giant’s loss-making label puts Dalal Street analysts off, and valuations are still regarded costly. “I don’t think it was a good buy; I think it was overpriced,” IIFL Securities director Sanjiv Bhasin told The Singapore Times Online. Paytm’s parent company, One 97 Communications, lost up to 27% of its IPO price on the first day of trading, wiping out substantial amounts of investor value in a matter of hours. Paytm’s stock fell to an intraday low of Rs 1,564 a share, down from an IPO price of Rs 2,150.

Do not buy the Dip

On the BSE, Paytm shares began at Rs 1,955, down 9.07 percent from the IPO price. The stock dropped more than 15% within minutes of the day’s trade opening, and after an hour, it was hanging between 20-25 percent, with no meaningful attempt to regain losses. The present dip in Paytm shares, according to market veteran Sanjiv Bhasin, does not deserve a buy note from him. “The market is unclear, and no one expected such a substantial offer with such limited future visibility.” “I believe investors should not buy lower and wait for the stock to settle before determining the market’s hue and proceeding from there,” he added.

Big bets should be avoided.

Despite the fact that Paytm’s stock has plummeted and wiped off 25% of IPO investor wealth, analysts are recommending investors to explore for alternative options. “We don’t believe it’s a suitable starting place.” “We indicated in a prior note that there are other firms to explore in new age companies, but investors should avoid placing significant bets,” said Religare Broking’s vice president of research, Ajit Mishra. “Even current prices don’t make sense for Paytm,” he continued.

Paytm is not a market leader.

The business’s intricacy is one factor that has dragged the stock down. “One of the things impacting on the stock is that few people understand what Paytm does and how they plan to produce revenues,” said Aditya Kondawar, COO of JST Investments. “In any of the businesses he leads, Paytm isn’t exactly a leader. “Of course, the Paytm brand is valuable because of its large client base, but present ratings have no safety margin,” he added.
Macquarie, a foreign brokerage firm, expressed similar concerns earlier today, predicting a 44 percent decline in the IPO price. Paytm, according to Macquarie analysts, is currently a heavy money consumer with its fingers in too many pies. Paytm will only be able to generate positive free cash flow by fiscal year 2029-30, according to the brokerage firm.

Where to invest, if not in Paytm

Instead of Paytm, Sanjiv Bhasin said he was positive on large-cap IT equities. “We like large-cap IT equities like TCS, Wipro, Infosys, and Tech Mahindra.” “We’d rather invest our money there,” he explained. Meanwhile, Ajit Mishra feels that investors can invest in new age internet companies such as Nykaa, Zomato, and Policybazaar, but cautions investors, advising them to invest in stages due to the high cost of evaluations.