Blissfully unaware of the crisis looming over Paytm, mutual funds, retail investors, and foreign institutional investors (FIIs) increased their stakes in the new-age stock during the December quarter. Following a staggering 42% decline in three days, 11 lakh retail shareholders, 514 FIIs, and 97 mutual fund schemes are ensnared.
During the December quarter, the shareholding pattern revealed a rise in MF ownership in Paytm from 2.79% to 4.99% quarter-on-quarter. FII holding also surged by 280 bps to 63.72%, while retail ownership, encompassing those with holdings up to Rs 2 lakh, escalated by 457 bps to 12.85%. Prominent FII investors such as BNP Paribas Arbitrage and Canada Pension Plan Investment Board possess over 1% stake each in Paytm. Mirae Mutual Fund emerged as the top investor in the Paytm stock, owning a 2.51% stake in the troubled fintech by the end of the December quarter. Nippon Mutual Fund also held more than a 1% stake in Paytm.
Mutual Funds Invested in Paytm
According to Ace MF data, at least 6 mutual fund schemes held over Rs 100 crore exposure in Paytm, while approximately 40 schemes had less than Rs 10 crore exposure. The top schemes invested in the fintech company include Mirae Asset Large Cap Fund (Rs 430 crore), Mirae Asset Focused Fund (Rs 269 crore), Quant Mid Cap Fund (Rs 134 crore), Nippon India Large Cap Fund (Rs 127 crore), and Mirae Asset ELSS Tax Saver Fund (Rs 105 crore).
At the fund house level, Mirae’s investment in Paytm by the end of the December quarter exceeded Rs 1,000 crore, while Nippon MF had Rs 420 crore invested in the Paytm stock, and Aditya Birla Sun Life Mutual Fund held Rs 143 crore.
Advice for Paytm Investors Amid Regulatory Turmoil
Paytm investors face uncertainty amid RBI’s ban on Paytm Payments Bank for non-compliance, triggering a stock downturn. The situation worsened with reports of a potential investigation by the Directorate of Enforcement for alleged money laundering and KYC norms violation. Morgan Stanley’s bottom-fishing attempt, acquiring a marginal 0.8% stake in the fintech company through the open market for about Rs 244 crore, prompted some retail investors to consider similar actions. However, many hesitated to buy the dip with the stock opening at a 10% lower circuit on Monday.
Analysts caution retail investors against attempting to catch the falling knife until the regulatory issues are resolved. Rahul Jain of Dolat Capital remarked,
“Given the volatility and the myriad of news circulating, it’s challenging to predict the stock’s trajectory or when the situation might improve.”
Analysts Find it Difficult to Predict Paytm’s Future
Market advisor Sandip Sabharwal emphasized the challenges in forecasting whether the pain in Paytm stock would persist or if it would rebound. He stated that the business had been severely disrupted, leading to uncertainties about the company’s future structure, earnings contributors, and customer retention. As a result, predicting the stock’s likely value has become extremely challenging. Sabharwal noted that those investing now may either make good profits or incur significant losses, highlighting the unpredictable nature of the situation.
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