Why analysts are okay with SoftBank’s share sale in Paytm

When it comes to Paytm, SoftBank has been at a distance for a long time now. The investment firm has not had a representative on Paytm’s board for over six months now, which means that it doesn’t have right to information first in the company.

In fact, analysts have been calling SoftBank’s stake sale in Paytm as insignificant, as it was a predicted event — for a pre-IPO investor to sell shares at some point.

In a media article, Shivaji Thapliyal, Head of Research and Lead Analyst, Yes Securities said that “Any selling of the magnitude that Softbank has planned naturally exerts downward pressure on a stock. However, we regard institutional selling as a non-fundamental reason for weakness in a stock and we do not lend too much importance to it.”

With the block deal, as per NSE data, BoFA securities Europe SA has bought 50,26,428 Shares of Paytm, Societe Generale bought 70,85,227 shares while Morgan Stanley Asia Singapore Pte has bought 60,03,468 shares. Media reports say the buyers were Norges Bank, Segantii, Millenium, LMR, Ghisallo buyers.

Recently, the company beat analyst estimates and registered 76% growth in revenue y-o-y to Rs 1,914 crore. Meanwhile, the company’s losses reduced by 11% on a sequential basis. The company’s ??contribution profit surged 224% y-o-y to Rs 843 crore.