Macquarie Capital Securities (India) Pvt., which was vindicated on its initial downbeat call on Paytm, maintained its bleak view on profitability Monday after the digital payments startup released financial details for the critical period ahead of the Diwali holiday.
Paytm's price-to-sales valuation remains expensive and “profitability should remain elusive for a long time,” the brokerage said in a note. The company saying over the weekend that gross merchandise value surged 131 per cent on-year in October doesn't materially affect Macquarie's profit and loss estimates, analysts Suresh Ganapathy and Param Subramanian wrote.
One 97 Communications Limited, the parent company for the payments platform, tumbled as much as 19 per cent on Monday to 1,271 rupees ($17.08). This followed a 27 per cent slump on debut on November 18, when Macquarie initiated coverage on the stock with an underperform rating and price target of Rs 1,200.
The poor debut may cool sentiment in India's stock market boom, which had ranked among the world's most frenzied. The initial public offering had been touted by some as a symbol of the country's growing appeal as a destination for global capital, particularly for investors looking for alternatives to China.