Vijay Shekhar Sharma's wealth eroded over $781 million in two sessions after One97 Communications Ltd, the parent company which owns and operates brand Paytm, stock continued its downtrend. Paytm's market capitalisation has now slipped below ₹1 trillion.
Before the opening of the IPO, Sharma's stake in the firm was valued at $2.3 billion at its issue price of ₹2150. Sharma, who founded the company in 2000, holds 9.1% stake or close to 6 crore equity shares in Paytm. He also holds 2.1 crore options in the firm.
The stock hit a low of ₹1370 and declined as much as 12.70% on Monday. At 10.38am, the stock traded at ₹1382 on the BSE, down 11% from its previous close.
Paytm lost nearly 36.27% in thelast two sessions with eroding over ₹50,000 crore market value. Before listing, analysts pegged its market value at ₹1.39 trillion.
Macquarie report called out the company for its history of spinning off several business verticals without achieving market leadership or profitability. The report states that Paytm has been a cash-burning machine, spinning off several businesses with no visibility on achieving profitability.
The brokerage firm has reduced its target price by 44% to ₹1200 a share on Thursday. Paytm's business model lacks focus and direction, it said while calling the company a 'cash guzzler'.
The firm on Sunday reported an overall gross merchandise value (GMV) of ₹832 billion (roughly $11.2 billion) in the month of October 2021, the company said as a part of its latest disclosures with the stock exchanges on Sunday evening.
Paytm’s monthly transacting users also grew by 35% year-on-year to 63 million in the month of October 2021. It had earlier reported 47 million monthly users in October 2020. The average monthly active users for the quarter ending September 30, this year, stood at 57 million, the company reported on Sunday.
Investors will now await earnings of the firm which will be announced on 27 November.
"The company has a huge customer base with strong brand positioning and it has an early mover advantage in digital payment services however it is still a loss-making company and very aggressively priced therefore we saw a tepid response in terms of subscriptions. It is difficult to value such kind companies for time being but by the time market will understand the way to value such kinds of businesses where the market will focus on how fast it will become profitable and how well it will use its strength to explore new businesses like Credit card and Payment banking", said Santosh Meena, Head of Research, Swastika, Investmart.