The parent firm of Paytm, One97 Communications, had a 19% decline in its stock on Thursday. The shares fell 18.74 percent to close at ₹660.70 on the National Stock Exchange at the conclusion of the day. The shares fell 18.69% on the Bombay Stock Exchanges, closing at ₹661.30 per.
The company’s declaration that it will slow down on loans under ₹50,000 and concentrate on larger loans set off the carnage. The business declared that it would prioritize the merchant side over the customer side. “We will try to do a lot more there. Our focus now on the calibration of business is on high ticket, slowing down to less than ₹50,000,” Paytm’s President and Chief Operating Officer Bhavesh Gupta averred on Wednesday.
At least five brokers, including Goldman Sachs Group Inc., JPMorgan Chase & Co., and Citigroup Inc., cut their ratings following the company’s announcement that it will reduce loans below ₹50,000, according to Bloomberg.
Because credit card debt and personal loans are unsecured, the Reserve Bank of India requested in November that lenders increase their provisions against them. The change might reduce consumer spending.
Although the move helps Paytm recruit clients, Citigroup’s analysts noted in a report that it may have an impact on the company’s medium-term growth potential. The stock was downgraded from buy to neutral.
Additionally, it projected a 20 percent decline in Paytm’s operating profit for the 2024–2025 fiscal year. It further mentioned that over 75% of Paytm loans were for less than ₹50,000.