paytm share price analysis

Paytm Share Price Crash By 73%. Is It a Good Buy in 2022?

Paytm share price crashed by more than 70% from its all time high of 1961 to 521.

Imagine what will happen, if you had invested 1 Lakh Rupees in Paytm IPO. Your Paytm share value will be just Rs. 30,000/-.

The decline in the shares price of Paytm’s parent company One 97 Communications Ltd is still continues. The company is making fresh records low every day.

Shares of Paytm had reached a fresh life time low of 521 on 24th Mar 2022. This is the lowest price ever at the time of writing this post.

Nothing positive is visible for the Paytm at this time. Moreover, RBI had also announced to ban Paytm Payments Bank from adding new customers.

Along with this, the bank was also asked to conduct a comprehensive audit of its IT systems. This has had a negative impact on the company’s stock.

Apart from this, there was news about Paytm founder Vijay Shekhar Sharma that he hit a person’s car in Delhi, for which he was also arrested in February.

Apart from all this, the business model of the company is nothing special and the company is running at a loss.

However, the users of Paytm have not decreased. Paytm shares have lost more than 70 per cent from its issue price of Rs 2,150.

The company was listed on the stock exchanges in November 2021. It had kept the issue price of Rs 2150 in the IPO. However, shares price of Paytm have not yet reached this level.

Paytm’s all-time high is Rs 1,961, which was recorded on the day of listing. Since then, there has been buying in the shares of the company only in a few business days, otherwise the shares of the company have remained in loss every day.

About Paytm

Paytm is an Indian e-commerce shopping website. It was inaugurated in 2010, owned by One97 Communications, which initially used to do mobile and DTH recharge.

The headquarter of the company is in Noida, India. It gradually provides electricity bill, gas bill as well as recharging and bill payment of various portals.

Why Paytm Share Price Has Fallen So Much?

Here are the top 5 reasons that drag Paytm share price

Valuation is Too High

Paytm demanded high valuation despite the stiff competition in each of its business segments without market leadership in any one of them.

Analysts are worried that profitability may be elusive for a long time. The Paytm IPO was biggest after Coal India’s 2010 initial share sale and raised around Rs. 18,200 crore.

Impact of Federal Reserve’s Stance

The US Federal Reserve may increase interest rates earlier than had been foreseen have damaged the valuations of new age tech companies across the globe.

When major central banks around the world go for rate hike, then you can expect valuations to cool down.

RBI Norms

Reserve Bank of India announced to ban Paytm Payments Bank from adding new customers.

Moreover, its proposal to start insurance business has been rejected by IRDA as well

Top Management Leave Company

Three top officials executives have recently resigned from Paytm. Even, five of its senior executives had quit ahead of its IPO.

Senior executives have been resigning from Paytm which is a cause of concern. It could impact the business if the current rate of attrition continues.

Downgrades by Brokerages Houses

Recently downgraded by foreign investment firms have damaged the market sentiments among investors.

Macquarie Research retained its underperform rating. JM Financial also initiated a sell rating.

Will Paytm Share Price Increase?

For the time being, Paytm share price is in down trend. However, we all know that it is in downtrend.

Million dollar question is when Paytm stock price will reverse?

Is there any sign of reversal or it might continue its southward journey. Investors especially retail and small traders looking to exit for any upmove.

Personally, at this time I remembered a quote from Warren Buffet who says that “be fearful when others are greedy, and greedy when others are fearful.”

However, is it the right time to be greedy to invest in Paytm?

Well, I invest in stocks based on technical instead of fundamentals. Although I follow fundamentals a little bit only and all my analysis is based on Price-Action.

So, I found Paytm stock price is forming reversal pattern like rounding bottom in 4H time frame.

At the time of writing this post, Paytm is trading at around 617.

It has a recent support at around 600-580 and resistance at 650-660. It also has another resistance at around 735.

Having said that, I prefer to wait till it breaks 735 level with volume and observe how price react at that level.

So, till it breaks 735 it is better to watch Netflix.

Those who have already invested, better keep your Stop Loss at 515. In case, it breaks and close below 515.

 

paytm share price prediction

 

Paytm Share Price Prediction

If Paytm stock price able to sustains above 735, then I am expecting it to hit 815 followed by 870.

Next resistance is at around 990 and once it breaks then you can witness Paytm stock price to touch 1140.

Its final but most strong resistance is at around 1285. So, keep trail your stop loss and ride the trend as it goes in your favour.

 

 

Ratan Kumar

Ratan Kumar, an enthusiast stock market trader & blogger. He is the founder of akme. Forecasting stock market moves with the use of technical analysis since 2008. For the technical trader & investor, new or experienced, he provides legitimate and valuable advisory from day trading to long-term investment horizon and helped thousands of investors to make money out of the stock market.

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