Paytm Share Crashes on Plans to Slow Down Postpaid Loans
by mydhanush on 7 December 2023, 2 min read
One97 Communications (Paytm) share price crashed as much as 20 percent intraday on December 7. This comes after the company announced plans to slow down its small-ticket postpaid loans. It is looking to expand its high-ticket personal loans and merchant loans.
The digital payments firm said it will issue fewer sub-Rs 50,000 personal loans. This comes after the central bank tightened rules on consumer lending, according to a Reuters report.
The stock posted its biggest intraday percentage fall since listing two years ago. The scrip was trading at Rs 672.40 per share on NSE, down Rs 140 or 17.30 percent at 11:24 AM.
The non-bank lender said on December 6 it will expand its portfolio of high-ticket personal and commercial loans to lower-risk and high-credit-worthy customers.
Paytm’s plans to give out more higher ticket loans would not fully offset a scale back of smaller-ticket loans, analysts at Goldman Sachs said in a note. It downgraded the stock to ‘neutral’ from ‘buy’. The firm also lowered the price target to Rs 840 from Rs 1,250, the report said.
The company’s lending growth, a core driver of Paytm’s profitability, is anticipated to decelerate, while payments, commerce and cloud momentum would remain strong, the analysts said.
Goldman Sachs now expects Paytm’s net income to turn positive in fiscal year 2025-26, a year later than previously expected, owing to slow revenue growth.
Disclaimer: The information provided in this blog post is for informational purposes only and should not be construed as investment or trading advice. The author is not a financial advisor and does not have any professional qualifications in this area. The author does not guarantee the accuracy or completeness of the information provided. Any action you take based on the information in this blog post is done at your own risk. Please consult with a financial advisor before making any investment decisions.
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