Paytm witnessed a sharp decline of up to 20% in early trade on Thursday, following its announcement of a substantial reduction in postpaid and small-ticket personal loans below Rs 50,000. The company revealed its intention to focus on larger ticket personal and business loans.
This downturn marked the most significant intraday percentage fall in Paytm’s shares since its listing two years ago.At 9:35 am, the stock was trading 17.2% lower at Rs 673.15.
The recent increase in capital requirements by the RBI for small-ticket personal loans, particularly those below Rs 50,000, has led to higher costs for lenders. This move has impacted the sub-Rs 50,000 segment significantly, contributing to Paytm’s strategic shift.
Analysts at Goldman Sachs expressed skepticism about Paytm’s plans, stating that the expansion of higher ticket loans might not fully offset the reduction in smaller-ticket loans. Consequently, Goldman Sachs downgraded the stock from ‘buy’ to ‘neutral’ and lowered the price target to Rs 840 from Rs 1,250.
While Paytm’s lending growth has been a key driver of profitability, analysts anticipate a deceleration in this aspect, despite a positive outlook for payments, commerce, and cloud services. Goldman Sachs now projects Paytm’s net income to turn positive in fiscal year 2025-26, a year later than initially expected, citing sluggish revenue growth as a contributing factor.
This downturn marked the most significant intraday percentage fall in Paytm’s shares since its listing two years ago.At 9:35 am, the stock was trading 17.2% lower at Rs 673.15.
The recent increase in capital requirements by the RBI for small-ticket personal loans, particularly those below Rs 50,000, has led to higher costs for lenders. This move has impacted the sub-Rs 50,000 segment significantly, contributing to Paytm’s strategic shift.
Analysts at Goldman Sachs expressed skepticism about Paytm’s plans, stating that the expansion of higher ticket loans might not fully offset the reduction in smaller-ticket loans. Consequently, Goldman Sachs downgraded the stock from ‘buy’ to ‘neutral’ and lowered the price target to Rs 840 from Rs 1,250.
While Paytm’s lending growth has been a key driver of profitability, analysts anticipate a deceleration in this aspect, despite a positive outlook for payments, commerce, and cloud services. Goldman Sachs now projects Paytm’s net income to turn positive in fiscal year 2025-26, a year later than initially expected, citing sluggish revenue growth as a contributing factor.
