It seems that despite the recent downgrades, none of the analysts covering Paytm have issued a “sell” recommendation yet. According to reports, 11 out of the 15 analysts still maintain a “buy” rating on the company.
Paytm’s parent company, One 97 Communications Ltd., is facing its worst day since listing with a 20% drop in share prices. The decline came after the company announced plans to scale back small ticket loans and recalibrate its Buy Now, Pay Later (BNPL) business.
Analysts who track Paytm have recently downgraded the stock or cut their price targets for the next 12 months. However, Paytm mentioned during an analyst call held on Wednesday that there is good demand for higher ticket size loans (between ₹3 lakh to ₹7 lakh), low-risk personal loans, and merchant loans.
Paytm also stated during the analyst call that it is in consultation with lending partners and plans to reduce loans worth less than ₹50,000, while expanding to higher ticket size loans.
Several brokerage firms, including Jefferies and Bernstein, have downgraded or cut their price targets on Paytm due to the company’s plans to recalibrate its BNPL business and scale back small ticket loans. While Jefferies predicts a halving in BNPL disbursals, Paytm’s management expects limited earnings impact as they scale up high-ticket personal and merchant loans. Morgan Stanley has maintained its Equal-Weight rating with a price target of ₹830.
Paytm’s shares are currently down by 20% at ₹650.45 and have not been part of the recent rally in the broader markets. From October 26 to December 6, while the Nifty Midcap index rallied over 5,500 points, shares of Paytm fell by 7%, making it the worst-performing stock on the index during that period.
