You are here: Home » Companies » News
Business Standard

Is all well with fintech giant Paytm?

Paytm's debut on Dalal Street was disappointing. Last Friday, it announced shutting down its operations in Canada. What is happening inside the country's fintech giant - our next report offers a peek

Topics
Paytm | mobile wallets | Digital Payments

Harshit Rakheja & Krishna Veera Vanamali  |  New Delhi 

2021 may well be summed up as the year of startup IPOs. They finally came of age, mostly because of unexpected windfall during the pandemic. The markets saw eight startup IPOs last year. But the clear leader of the pack, Paytm, turned out to be a lame duck.

While it was India’s biggest IPO ever as it looked to raise Rs 18,300 crores at an issue price of Rs 2,150, the firm’s shares plummeted soon after its public market debut.

Market experts, brokerages and investors were spooked by the company’s long-term financial prospects and timeline for attaining profitability.

Two months later, the negative sentiment around stock hasn’t abated. On January 17, the company’s stock was trading at Rs 1,099, more than 50% lower than its issue price of Rs 2,150. The stock hit a high of Rs 1,961.05 on November 18, but has failed to touch its issue price since listing.

Macquarie’s previous target price for was Rs 1,200 in November. But last week, retaining its lowest rating for One97 Communications Ltd, Macquarie further cut its target price to Rs 900, implying a 25% downside from current levels.

Macquarie explained its reasons.

The RBI could curb wallet charges as it reviews the charges levied on customers across various digital payment modes.

Prepaid payment instruments (PPIs) and wallet like Paytm, Mobikwik, PhonePe, Freecharge, Amazon Pay, etc., charge customers anywhere between 2 percent and 2.5 percent. The payments business still forms 70% of Paytm’s overall gross revenue and hence any regulations capping charges could impact revenues significantly.

Also, the Insurance Regulatory and Development Authority of India’s recent decision not to grant an insurance license to could affect the firm’s chances of getting a banking license.

Senior management attrition and a fall in the average ticket size of loans disbursed to Rs 5000 are other factors that impact the company’s long-term financial prospects.

JPMorgan, Morgan Stanley and Goldman Sachs have however set a one-year price target of Rs 1,630-1,875 on Paytm. The three were among the lead bankers for the Paytm listing and have cited the company’s strong network effect and cross-selling opportunities are strong levers for growth.

“Macro factors like quantitative easing, free money due to US monetary policy and other parameters led to a spook in the market in terms of pricing the IPO. Paytm’s shares have received a similar response to that of global peers in the last six months…But that is not a complete reasoning. What happened to the IPO is still a question,” says Vijay Shekhar Sharma.

Paytm CEO Vijay Shekhar Sharma has said that the company’s share market performance has been in line with that of global peers in the sector over the past six months due to macroeconomic factors. On the question of small ticket size of loans, Sharma has said that it is by design to ensure better quality of loans. While Paytm has made its presence in digital payments, going forward, its execution in financial services and cloud segments will be watched closely. Investors will also look at how Paytm will monetise its bevy of services in a highly competitive industry.

Watch video

MONTHLY STAR

Business Standard Digital

Business Standard Digital Monthly Subscription
199.00  
subscribe
Complete access to the premium product
Convenient - Pay as you go
Pay using Amex/Master/VISA Credit Cards and VISA Debit Cards Only
Auto renewed (subject to your card issuer's permission)
Cancel any time in the future
Requires personal information

What you get?

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all the content on any device through browser or app.
  • Exclusive content, features, opinions and comment – hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.
  • 18 years of archival data.

NOTE :

  • The product is a monthly auto renewal product.
  • Cancellation Policy: You can cancel any time in the future without assigning any reasons, but 48 hours prior to your card being charged for renewal. We do not offer any refunds.
  • To cancel, communicate from your registered email id and send the email with the cancellation request to assist@bsmail.in. Include your contact number for speedy action. Requests mailed to any other ID will not be acknowledged or actioned upon.

SMART ANNUAL

Business Standard Digital
Subscribe Now and get 12 months Free

Business Standard Premium Digital - 12 Months + 12 Months Free
1799.00
subscribe
Subscribe for 12 months and get 12 months free.
Single Seamless Sign-up to Business Standard Digital
Convenient - Once a year payment
Pay using an instrument of your choice -all Credit and Debit Cards, Net Banking, Payment Wallets, and UPI
Exclusive Invite to select Business Standard events

What you get

ON BUSINESS STANDARD DIGITAL

  • Unlimited access to all content on any device through browser or app.
  • Exclusive content, features, opinions and comment - hand-picked by our editors, just for you.
  • Pick 5 of your favourite companies. Get a daily email with all the news updates on them.
  • Track the industry of your choice with a daily newsletter specific to that industry.
  • Stay on top of your investments. Track stock prices in your portfolio.

NOTE :

  • The monthly duration product is an auto renewal based product. Once subscribed, subject to your card issuer's permission we will charge your card/ payment instrument each month automatically and renew your subscription.
  • In the Annual duration product we offer both an auto renewal based product and a non auto renewal based product.
  • We do not Refund.
  • No Questions asked Cancellation Policy.
  • You can cancel future renewals anytime including immediately upon subscribing but 48 hours before your next renewal date.
  • Subject to the above, self cancel by visiting the "Manage My Account“ section after signing in OR Send an email request to assist@bsmail.in from your registered email address and by quoting your mobile number.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Tue, January 18 2022. 08:15 IST
RECOMMENDED FOR YOU
.