Shares of One97 Communications, the parent company of fintech firm Paytm, faced a sharp single-day decline as it announced scaling back of small-value loans. This shift in strategy led the stock to hit the 20% lower circuit at Rs 650.65.

Paytm opened 8% down and went on to trigger the lower circuit after it outlined plans to grow high-ticket personal loans and merchant loans between INR 3-7 lakhs. The move follows RBI’s recent guidelines increasing risk weights for certain unsecured loans.

Reacting to the update, Goldman Sachs downgraded its rating to ‘neutral’ from ‘buy’ earlier while making deep cuts to its target price, revenue and earnings projections citing muted lending growth. Similarly, Jefferies maintained its ‘buy’ call but trimmed its target drastically due to the reworking of Paytm’s BNPL volumes.

Additionally, several other brokerages like CLSA and JPMorgan also revised their targets on the counter after the company’s decision.

The sharp single-day decline signals market concerns around Paytm’s growth path in light of its reduced appetite for small-value loans. Investors are advised caution amid the bearish expert outlook.