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Paytm’s risk appetite shrinks, analysts follow suit with downgrades


One 97 Communications, the parent company of fintech firm Paytm, has seen a slew of downgrades and target price reductions by analysts after its decision to resize its lending portfolio.

On December 6th, Paytm outlined plans to trim exposure to sub-INR 50,000 loans and recalibrate its buy-now-pay-later (BNPL) offerings during an analyst call. It said demand remains robust for larger ticket personal loans and merchant loans between INR 3-7 lakhs.

Reacting to the update, Goldman Sachs downgraded Paytm to ‘neutral’ from ‘buy’ and slashed its target price to INR 840 from INR 1,250 previously. It lowered its 2024-26 revenue and EBITDA projections by 10% and 40% respectively citing reduced lending estimates.

Likewise, Jefferies maintained its ‘buy’ rating but cut its target drastically to INR 1,050 from INR 1,300 earlier. It predicts Paytm’s BNPL disbursals to halve in coming months which the firm aims to offset via other loan categories.

On December 6th, Paytm stock fell over 3% as the postpaid service faced temporary issues. Moreover, CLSA’s comments around an indirect hit to fintech firms from RBI’s risk weight changes for certain loans also weighed.

The scaling back of Paytm’s loan and BNPL books due to industry-level factors has worried analysts prompting downgrades and price target cuts due to growth concerns.

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