The recent shareholding pattern of One97 Communications, the parent company of Paytm, reveals significant changes in the stakes held by different types of investors during the September quarter. According to the latest data, small retail investors and foreign portfolio investors (FPIs) have both reduced their stakes in the company. As of September, the number of small shareholders—defined as those with authorized share capital of less than ₹2 lakh—has fallen to 10.27 lakh, down from 11.43 lakh previously. This shift represents a decrease in retail shareholding from 14.28% in June to 13.19% at the end of the September quarter, indicating a trend that may concern market analysts about the overall interest of smaller investors in the stock.

Similarly, FPIs have also cut their holdings in Paytm during the same period. The stock, which is notable for having no promoter holding, saw FPI stakes decline from 58.24% at the end of June to 55.53% by September. This reduction raises questions about foreign investor confidence in the long-term growth prospects of Paytm amidst a fluctuating market.

In a contrasting trend, India's Mutual Funds have notably increased their exposure to Paytm during the three-month period. Their stakes have risen from 6.8% in June to 7.86% in September, showcasing a growing institutional interest. Notably, both Nippon Mutual Fund and Mirae Mutual Fund have emerged as key players in this shift, increasing their stakes to 1% or more during the September quarter. This influx of mutual fund investment could suggest a belief in Paytm’s potential for recovery and growth, especially following its remarkable performance in recent months.

Indeed, Paytm shares surged by 71% during the July-September period, marking the company’s best quarterly performance since it went public. This recovery follows a challenging phase for the stock, which hit an all-time low of ₹310 after the Reserve Bank of India imposed restrictions on its Payments Bank. The recent uptick has helped the stock return to a positive trajectory on a year-to-date basis, even though it still remains 66% lower than its original IPO price of ₹2,150 per share.

In a recent event, Vijay Shekhar Sharma, the founder of Paytm, expressed regret over not choosing the right bankers for the company’s IPO, a sentiment that resonates with many in the investment community who have been closely following Paytm's journey since its public offering. The mixed reactions from small and foreign investors contrasted with the bullish stance taken by mutual funds, illustrating the complex dynamics at play within the stock.

Currently, Paytm shares are trading 0.6% higher at ₹727, reflecting a cautious optimism among some investors despite the overall volatility in the market. The distinct trends in shareholding reveal the shifting sentiments towards Paytm, as it navigates the challenges of the digital payments landscape in India.

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