Paytm could face ‘tough times’, stockbrokers recommend staying away from stocks

  • Once again, Macquarie has further reduced Paymenttarget price at ₹450.
  • RBI’s recent restrictions on the Paytm Payment Bank sparked a sell-off among investors.
  • Stockbrokers have advised investors to steer clear of Paytm shares for now.

Global investment bank Macquarie has further reduced financial payments company Paytm’s target price to ₹450, citing “difficult times ahead”.

Suresh Ganapathy, as an Associate Director at Macquarie, pointed out in the report that the Reserve Bank of India’s (RBI) recent restriction on Paytm Payments Bank has reduced the firm’s chances of obtaining a small financial banking license. “thus hampering its ability to lend”.

“Given this and competition from other fintechs in the payments space, we remain skeptical of Paytm’s longer-term ability to generate free cash flow,” the Macquarie report said.

Any payment bank that has completed five years of business can opt for a small financial banking license with the RBI. Since Paytm Payments Bank started operations on May 23, 2017, it will be able to apply for a license by May-June this year.

This is the fourth time Macquarie has reduced Paytm’s target price. It was previously set at ₹1,200 in November 2021, then reduced to ₹900 in January 2022, then to ₹700 in February 2022. Continued decline in Paytm share price allowed Macquarie’s prediction to be correct .

Shares of Paytm were currently trading at ₹623 at 10:04 AM on March 17 morning. Paytm had raised capital at the valuation of $19.9 billion in its initial public offering (IPO) at an issue price of ₹2,150. Its current market capitalization is ₹40,360 crore ($5.3 billion).

BI India

Even Indian stock brokers – like Manoj Dalmia of Proficient Equities, Ravi Singh of Share India, Anuj Gupta of IIFL Securities – expect Paytm to hit the ₹500-550 mark soon.

Ravi Singh, vice president and head of research at Share India, advised investors to “exit the stock and wait for stability at lower levels for new entry.”

Likhita Chepa, senior research analyst at CapitalVia Global Research, also advised investors to steer clear of Paytm shares as it is unclear when the company might be able to turn a profit. “It has been found that the company’s losses have widened and it seems that the company cannot go back,” she added.

Disclaimer: The stock recommendations in the article are given by the respective stockbrokers. Business Insider assumes no responsibility for investment advice.


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