Mutual funds boost holding in Paytm to all-time high in December quarter

Mutual funds significantly increased their stake in One 97 Communications, the parent company of Paytm, during the third quarter of the current fiscal year (Q3FY25) to an all-time high level.

As of the end of December 2024, 27 mutual funds collectively held an 11.20% stake in Paytm, equivalent to 7.14 crore shares. This marks a notable increase from the 7.86% stake held at the end of the previous quarter in September, according to Trendlyne’s shareholding data.

Mutual funds have been gradually accumulating shares in Paytm over time, with the most substantial rise occurring in the recently concluded quarter. Some of the key mutual funds that raised their stakes in the new-age stock include Mirae Asset Mutual Fund, which now holds a 4.17% stake in the company, Nippon Mutual Fund, which holds a 2.32% stake and Motilal Oswal Mutual Fund, which has a 2.11% ownership.

Similarly, foreign investors also boosted their stake in the company during the December quarter to 56.2%, a notable jump from 55.55% in the September quarter. Retail investors, on the other hand, pared their stake to 31.9% in Q3FY25 from 36% in the September quarter. 

Looking at the stock performance during the quarter, it has risen 48%, marking the second-biggest quarterly performance since its listing in November 2021.

The company’s shares also ended CY24 with a stellar gain of 60%, the largest yearly gain on record. Additionally, the stock emerged as the best turnaround stock of 2024, jumping 230% from a record low of ₹310 per share to ₹1,017 per share.

In early December, the stock crossed the ₹1,000 mark, reaching ₹1,062—a level last seen in January 2022. This resurgence can be attributed to the company’s improving prospects across its various business segments, which rejuvenated investor sentiment and bolstered confidence in its growth trajectory.

Selling pressure emerges amid UPI struggles

However, the stock has recently experienced selling pressure following the latest December NPCI data, which showed that Paytm struggled with its UPI transactions during December 2024. Its transaction volume stood at 1.15 billion, worth ₹1.25 trillion.

By comparison, PhonePe recorded a UPI transaction volume of 7.98 billion, valued at ₹11.76 trillion, in December. Google Pay followed with a UPI transaction volume of 6.1 billion, worth ₹8.22 trillion.

In terms of market share by transaction volume, PhonePe held the dominant share at 47.7% last month, followed by Google Pay at 36.7% and Paytm at 6.87%. Reacting to this development, the shares have dropped nearly 20% in the current month so far, reaching ₹817.9 apiece.

Meanwhile, Paytm is scheduled to report its Q3FY25 results on January 20, 2025. The Vijay Shekhar Sharma-led company reported a net profit of ₹928 crore for Q2FY25, its first-ever profit since listing in 2021.

However, this profit was primarily driven by a ₹1,345 crore gain from the sale of its ticketing business to food delivery company Zomato.

Disclaimer: We advise investors to check with certified experts before taking any investment decisions.