Paytm Faces Market Turbulence as Shares Plummet 20% on Policy Shift

Paytm Faces Market Turbulence as Shares Plummet 20% on Policy Shift Image: Reuters

VoM News Desk | December 7, 2023 | 11:11 AM IST | Breaking News | Follow on Google News

Paytm Faces Market Turbulence as Shares Plummet 20% on Policy Shift

Paytm Faces Market Turbulence as Shares Plummet 20% on Policy Shift

Shares of One97 Communications, the parent company of Paytm, plunged by the maximum limit of 20% to 650.45 apiece following the company’s decision to scale back small-ticket loans. The move, driven by regulatory changes, particularly impacts the Buy Now, Pay Later (BNPL) segment, which constitutes over 50% of the platform’s total disbursements.

Strategic Pivot: Paytm Shifts Focus to Higher-Ticket Loans Amid Regulatory Landscape

In response to recent regulatory guidance, Paytm announced a recalibration of its loan origination strategy, reducing the prominence of postpaid loans below ₹50,000. The company emphasized a continued commitment to merchant loans for business purposes, which remain unaffected by recent regulatory changes. Paytm is now steering towards higher-ticket personal and merchant loans, targeting lower-risk, credit-worthy customers through collaborations with major banks and NBFCs.

Market Response: Analysts Adjust Target Prices Following Paytm’s Policy Shift

The market reacted swiftly to Paytm’s strategic shift, prompting brokerage firms to adjust their target prices. Global brokerage firm Goldman Sachs downgraded the stock from ‘buy’ to ‘neutral,’ revising the target price to ₹840 apiece. Jefferies and Bernstein also made downward adjustments, while domestic brokerage firm Motilal Oswal maintained a ‘buy’ rating, highlighting Paytm’s strategic move toward higher-value loans and emphasizing strong demand with effective risk management.

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