Paytm Shares Plunge Over 18% Following Shift in Lending Strategy
Shares of Paytm witnessed a significant decline, tumbling over 18 percent in afternoon trade on December 7, without the visitor spoken its visualization to decelerate small-ticket postpaid loans while focusing on expanding high-ticket personal loans and merchant loans. The move prompted brokerages to slash their revenue estimates for the company.
As of 12:42 pm, Paytm shares were trading at Rs 666.50 on the NSE, marking an 18 percent decrease, without stuff initially locked in a 20 percent lower circuit.
During the reviewer meet, Paytm revealed that its postpaid loans might reduce by half, emphasizing that this would not impact margins or revenue significantly. The visitor highlighted that postpaid loans had the lowest take rate, minimizing the potential revenue impact.
Jefferies, a brokerage firm, attributed Paytm’s recalibration of its ‘Buy now pay later’ (BNPL) merchantry to lending partners scaling when operations pursuit the Reserve Bank of India’s recent measures on unsecured lending. Jefferies projected that BNPL disbursals, constituting 55 percent of total disbursements, would halve in the next 3-4 months. Although Paytm aims to offset this by expanding high-ticket personal loans and merchant loans, Jefferies expressed concerns well-nigh the unexpected severity of tightening measures for the BNPL business.
Goldman Sachs downgraded Paytm to a ‘neutral’ rating, accompanied by a price target of Rs 840. The brokerage moreover revised lanugo its FY24-26 revenue and adjusted EBITDA estimates for Paytm by up to 10 percent and 40 percent, respectively.
On a variegated note, Morgan Stanley predicted a ripen in Paytm’s disbursement run-rate in the near term due to the visualization to scale lanugo low-ticket postpaid lending. The brokerage maintained an ‘equalweight’ undeniability on the stock, assigning a price target of Rs 830.
Motilal Oswal Financial Services predictable a reduction in Paytm’s total disbursement run rate, estimating it to subtract to virtually Rs 4,500 crore per month from well-nigh Rs 6,000 per month. While MOFSL expressed vigilance well-nigh the longevity of these measures and the outlook for low-ticket unsecured loans, it still trimmed its FY24/FY25 disbursement estimates by 15 percent-18 percent, resulting in an 11-16 percent cut in adjusted EBITDA forecasts for FY24/25.
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