Point cloud is a representation of objects or scenes utilising unordered points comprising 3D positions and attributes. The ability of point clouds to mimic natural forms has gained significant attention from diverse applied fields, such as virtual realityand augmented reality. However, the point cloud, especially the dynamic one, must be compressed efficiently due to its hugedata volume. The latest video-based point cloud compression (V-PCC) standard for dynamic point clouds divides the 3D pointcloud into many patches using computationally expensive normal estimation, segmentation, and refinement. The patches areprojected onto a 2D plane to apply existing video coding techniques. This process often results in losing proximity informationand some original points. This loss induces artefacts that adversely affect user perception. The proposed method segments dynamic point clouds based on shape similarity and occlusion before patch generation. This segmentation strategy helps tomaintain the proximity of the points and retain more original points by exploiting density and occlusion of the points . The experimental results establish that the proposed method significantly outperforms the V-PCC standard and other relevant methods in terms of rate-distortion performance and subjective quality testing for both geometric and texture data of several benchmark video sequences.