Paytm (abbr. for Pay Through Mobile) has rebounded to 571 from an all-time low of 521. It has risen more than 9% in the last 7 trading sessions, which is a symptom of a good recovery. Considering this movement, retailers who have learnt through free stock market courses are now anticipating a good upward move. Many of them are thinking to take trade into Paytm for the short term. Those who are still invested in the company, are now sensing a sigh of relief as the cycle of continuous fall has seemed to end in the past week. If you’re interested in reading about this popular share, continue with us, as we decode this stock for the future!
IPO Bubble-Trouble
The mammoth Rs 18915.9 Cr IPO, which was oversubscribed in both the Retail, Institutional Buyers and overall section, closed 27.25% below the listing price on the first day. Currently, it is giving a loss of 73.44% to those who got the allotment, provided they are holding the stocks. Before its listing, a huge positive aura was enveloping the IPO issue. But as soon as the stock listed and hit the lower circuit on listing day, news of its high valuation came into daylight. When curtains on the financial sheets went up, the horror in financial sheets became evident as the stock was continuing its free-fall.
The worst affected in this mania were the retailers who lost more than 70% of their invested capital. Devoid of proper knowledge, some even bought more in the dip. Those who knew fundamental analysis through a share market learning course exited their long-term positions as soon as they saw the financial sheets of the company.
Recent News & Fundamental Aspects
One of the largest digital ecosystems, Paytm or One 97 Communications provides e-commerce, digital payments, cloud and financial services to the consumers. It is also one of the 6 payment banks currently operating in India, under RBI. The company earns its revenue through its device rentals, payment processing, convenience, marketing, advertising, sourcing, collection, lending and brokerage fees apart from other modes.
As per the latest developments, RBI has supervised the Bank to stop onboarding of new customers, due to data outsourcing concerns. Paytm has also stated recently that the merchant payments through the Paytm platform have gone up by 105% in Jan and Feb 2022. Let’s discuss some key points of this stock after the stock market fundamental analysis.
Positive Points:
- Great brand loyalty and large customer base
Points to worry:
- No profitable year since 2015
- Negative ROE, ROCE and free cash flow
- No promoters and 89.58% holding in public
When one invests in a business, profitability is always checked first. If the business is not able to make profits, then it is simply termed as bad business, irrespective of its popularity. The same is the case with Paytm. Unless the financial sheets of the company show profits, it would be a gamble to invest.
Technical Outlook:
Coming to the shorter outlook, the rise in stock price has triggered a buy signal in many well-known, tested and trusted trading systems. Let’s have a look into it.
- MACD and RSI: The stock has generated a buy signal with an SL at Rs. 528.45. One can buy Paytm on Monday, 4th April 2022 with an SL.
MACD:
RSI:
- Moving Averages: The stock has been trading below 50 Daily Moving Average (DMA) and the 200 DMA values have not appeared yet.
Here are some crucial levels as per different strategies which could be taken as targets.
Fibonacci Pivots:
Pivot Standard:
Fibonacci Retracements:
Lastly, we would like to say that Investing in a folk-popular company is a very big risk. If you possess the appetite, only then think to invest in this stock. If you are thinking to take a trade on Monday, please enter with an SL. This is Goela School of Finance, financially empowering you!
