Warren Buffett Offloads Entire 2.46% Paytm Stake, Faces ₹507 Crore Loss

On November 28, 2023, shares of One 97 Communications, the parent company of Paytm, opened 1% lower following Warren Buffett's move to sell his entire stake in the digital payment giant. As per exchange data, Warren Buffett's investment arm BH International Holdings made a complete exit by selling 1.56 crore equity shares, or 2.46% of the paid-up equity, through open market transactions. The average price per share was ₹877.29, resulting in a transaction amount of ₹1,370.6 crore.

Buffett's History with Paytm

BH International Holdings initially invested ₹2,179 crore in Paytm shares at an average cost of ₹1,279.7 per share in September 2018. During the IPO, it sold shares worth ₹301.70 crore at ₹2,150 per share. The latest transaction on November 24, 2023, involved selling shares worth ₹1,371 crore despite this, the total proceeds of ₹1,672.7 crore indicate a loss of about ₹ 507 crore for BH International.

In the wake of Buffett's departure, foreign investors seized the opportunity. Copthall Mauritius Investment and Ghisallo Master Fund LP purchased 75.75 lakh and 42.75 lakh shares, respectively, at an average price of ₹877.2 per share.

Pre-IPO investors, SoftBank and Ant Group, among others, have been gradually offloading Paytm shares in small tranches through open market transactions. Despite an initial dip in stock price upon listing, Paytm has delivered robust return, with a 104% rise in the past year, contrasting with the Nifty50's 8% increase during the same period.

In the last month, Paytm's stock has slipped by 4%. However, over the past six months stock is up 26%. Despite this recent gain, when compared to its all-time high of ₹1782, the stock is currently down by 43%, currently trading at ₹889.

Financial Snapshots

Paytm reported positive financial for the quarter ending September 2023. Paytm narrowed its losses to ₹290 crore, an improvement from ₹571 crore in the same period the previous fiscal year. Revenue from operations during this quarter grew 32% YoY, reaching ₹2,519 crore and Earnings before interest, tax, depreciation, and amortization (EBITDA) for the quarter stood at ₹153 crores.

Final Words

Warren Buffett's exit from Paytm has prompted shifts in ownership, with foreign investors expressing confidence in the company's future. As key investors adjust their positions, Paytm's strong financial performance and recovery in stock value highlight its resilience in the dynamic digital payment sector.