Paytm rallies 12% as Vijay Shekhar Sharma buys 10.3% stake from Antfin

Shares of One97 Communications, the parent entity of Indian mobile payments and financial services company Paytm, surged 12 per cent to Rs 887.55 on the BSE in Monday’s intra-day trade after founder and chief executive officer (CEO) Vijay Shekhar Sharma entered into an agreement with Antfin to purchase 10.3 per cent stake in Paytm through an off-market transfer.

On closing of this transaction, Sharma’s shareholding in Paytm (direct and indirect) will increase to 19.42 per cent, whereas Antfin’s shareholding will reduce to 13.5 per cent.

At 09:22 am; Paytm traded 8 per cent higher at Rs 861.55, as against 0.2 per cent rise in the S&P BSE Sensex. The stock had hit a 52-week high of Rs 915 on June 16, 2023. It had touched a record low of Rs 439.6 on November 22, 2022.

Paytm made stock market debut on November 18, 2021. The company had raised Rs 18,300 crore by issuing shares at a price of Rs 1,955 per share.

Sharma will purchase 10.3 per cent shareholding in Paytm from Antfin, via his 100 per cent owned overseas entity – Resilient Asset Management B.V. Post this transaction, Sharma will become largest shareholder of Paytm, displacing Antfin.

"Antfin will issue Optionally Convertible Debentures (OCDs) by Resilient Asset Management B.V. in consideration for the transfer and to retain economic value. Antfin will cease to be the largest shareholder and Paytm is expected to benefit from the new ownership structure," the company said in exchange filing.

Based on the closing price as on August 04, 2023, the value of the 10.30 per cent stake amounts to $628 million.

"Pursuant to this transaction, there would be no change in the management or control of Paytm. Paytm remains a professionally managed company with no identifiable promoter. Further, there is no nominee of Antfin on the Board of Paytm," the company added.

Technical View

Bias: Positive

Target: Rs 930

Support: Rs 755

The stock is seen holding above its 20-WMA (Weekly Moving Average) since early February 2023. The weekly chart suggests a potential upside target of Rs 930 in the near-term, as long as the 20-WMA support at Rs 755 is maintained. 

Among the key momentum oscillators, the DI (Directional Index) and MACD (Moving Average Convergence-Divergence) are in favour of the bulls, hence the stock may trade with a positive bias for now.

(With inputs from Rex Cano)