After a key broker further cut its price on the payments stock, the shares of Paytm closed Monday at a low of 1,157, the lowest since its market debut in November.
The stock dropped at 3.30 pm India standard time. Since its debut, the stock price of the company has fallen by over 50%. The firm's market cap was less than half of what it had sought during the debut and below the $16 billion valuation it raised in late 2019.
The price of One97 Communications, the parent firm of Paytm, plummeted on Monday after a report from the brokerage house, which kept its lowest rating on the firm and cut its target price. Over 300 million users have used Paytm, which operates a number of businesses including mobile wallet, credit top-ups, movies and travel ticketing.
At the time of market debut, the only firm that had a gloomy view on the outlook of the company was Macquarie. Bernstein analysts had estimated that the valuation of the company would be between $21 billion and $24 billion. Bernstein did not respond to a request for comment in November.
We have reduced our revenue CAGR from 26% to 23% for FY21- 26E due to the various business updates and results. Lower distribution and commerce/cloud revenues have led to us cutting revenue estimates for FY21-26E by 10% every year.
We lowered our earnings by 16-27%) due to lower revenues and higher employee and software expenses. We cut our TP by 25% due to lower sales numbers and a lower target multiple. Continue UP with a revised TP of 900.
The proposed digital payments regulations by the Reserve Bank of India could hurt the business of Paytm, where payments side still accounts for 70% of the firm's overall gross revenue. The departure of senior executives from Paytm and the smaller ticket size for loans disbursed by the company could affect the firm's future outlook.
In a report in the second half of December, analysts at Morgan Stanley labeled the firm as an "overweight" and assigned a target price of 1,875.
India's distinctive tech architecture and regula- tory supportive partnership approach are key enablers. India is under-penetrated in financial services and we expect strong growth. The penetration of third party digital distribution of financial services is low and we will see strong acceleration over the next five years, thanks to the distinctive rails in India.
We believe that the financial services of Paytm are synergistic, in line with the regulatory thought process. Balance sheet risk is low, and Paytm has technology capabilities to leverage alternative data sets as well as design custom products.
The story was updated at the end of the day to reflect price changes.
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