Paytm Shares Tank 20%, Hit Lower Circuit; Analysts Assign Call

Shares of One 97 Communications Ltd, parent company of Paytm, witnessed a decline of 20% and touched lower circuit when price declined to Rs 650.65 apiece in trade today after the firm declared plans to scale back small ticket loans and change its Buy Now, Pay Later (BNPL) business. Current market price of Paytm share is Rs 676.00 per share. Paytm stock also witnessed a spurt of more than 13.35 times in trade today till 10:39 am. The company has a market capitalisation of Rs 42,903.04 crore.

Paytm Expands Credit Distribution Business: The company on December 6 declared in a press release, "loan distribution business. The company announced that it will further expand its business to offer higher ticket personal and merchant loans, which would be targeted at lower risk and high credit worthy customers, in partnership with large banks and NBFCs."

On the back of recent macro development and regulatory guidance, in consultation with lending partners, in line with its continued focus on driving a healthy portfolio, the company has recalibrated the portfolio origination of less than ₹50,000, which is prominently the postpaid loan product and will now be a smaller part of its loan distribution business going forward.

According to a Paytm spokesperson, "As the lending distribution business is maturing, we see newer opportunities of expansion to offer high-value personal and merchant loans. We will continue to focus on originating the high portfolio quality for our lending partners, along with strict adherence to risk and compliance. We have seen great scale and acceptance for our loan distribution business, so we believe this expansion will further aid us to grow the business."

Valuation: 2 leading brokerage firms namely Goldman Sachs and Jefferies assigned ratings to Paytm shares. Goldman Sachs opted to downgrade Paytm to neutral from the previously assigned buy call and cut the target price as well quite significantly to Rs 840 apiece from Rs 1250 earlier.

Meanwhile, leading analyst Jefferies continues to maintain its buy rating on Paytm shares but significantly reduced the target price to Rs 1050 apiece from Rs 1300 previously. It said, BNPL disbursals, which currently are 55% of the overall loans, will halve in the next 3-4 months and the management plans to offset that with scaling up high-ticket personal and merchant loans.

Paytm Stock Performance & Return: Current market price of Paytm share on BSE is Rs 676.00 per share with intraday fall of 16.88%. Paytm stock hit lower circuit in trade today. The stock's 52-week high price is Rs 998.30 per share and 52-week low price is Rs 472.00per share, respectively. Paytm shares declined 24% in last 1-week, fell 24% in last 1-month, and slipped 8% in last 6-months. In last 1-year, Paytm shares gained 30.55% and declined again 58% in last 2-years.

About: Paytm is India's leading mobile payments and financial services distribution company. Pioneer of the mobile QR payments revolution in India, Paytm builds technologies that help small businesses with payments and commerce. Paytm's mission is to serve half a billion Indians and bring them to the mainstream economy with the help of technology.

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