Paytm shares drop again on Day 2. Should you buy, sell, or hold?

Paytm share price: After plunging around 27 per cent after listing on Thursday, Paytm shares today further crashed near 10 per cent in early morning deals. Shares of the digital payments startup today opened with a downside gap of ₹51.80 per shares, and went on to lose around 17 per cent from its listing date close of ₹1560.80 per shares on NSE. Paytm share price today is at ₹1286.60 (at 12:31AP) on NSE, which is around 40 per cent lower from its upper price band of ₹2150 per equity share.

After weak debut at Indian bourses Thursday, Paytm released financial details for the month of October, which includes the critical period ahead of the Diwali holiday. Gross merchandise value rose 131 per cent to 832 billion rupees ($11.2 billion) for the month, the company said. Loan disbursal, which analysts see as key to Paytm turning profitable, increased more than 400 per cent to 6.27 billion rupees.

After this release; Deven Choksey, a strategist at KRChoksey Investment Managers Pvt said, "The stock price may not go down significantly since 87 per cent of issue was subscribed by institutional investors, who can always support the price."

However, Ravi Singhal, Vice Chairman at GCL Securities said, "Paytm's profitability is under scanner as it is facing huge competition in the market. Apart from this, the IPO was highly priced at the upper band of ₹2150 per share. So, my advice is to avoid taking any fresh position in it and those who have shareholding in the counter should wait for a bounce back and exit."

Highlighting the high valuation of Paytm IPO, stock market experts Suresh Ganapathy and Param Subramanian wrote in the note, "Considering Paytm’s heavily cash-burning business model, no clear path to profitability, large regulatory risks to the business and questionable corporate governance, we believe the company is overvalued at the upper end of price band of ₹2,150."

One97-owned Paytm lost more than 25 per cent of its value in its first day of trading, marking one of the worst-ever debuts by a major technology company and casting a chill over a stock-market boom that had ranked among the world’s most frenzied. The IPO 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.

However, Paytm CEO Vijay Shekhar Sharma is unmoved by this continuous crash of the company shares citing the slump is "no indicator of the value of our company." The 43-year-old said this in an interview with Bloomberg News on Thursday adding, “We are in it for the long haul. We’ll put our heads down and execute." (With inputs from Bloomberg)

Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.