The shares of one of the leading payment aggregators hit a 20 percent lower circuit following its decision to concentrate on higher ticket loans and reduce disbursement of loans under Rs. 50,000, which gave a negative sentiment to the investors as they believe it is not good for the business.
In the day’s opening on December 7, 2023, the shares of One 97 Communications hit a 20 percent lower circuit at Rs. 650.45, and its market capitalization is Rs. 42,376 Crores.
One 97 Communications also known as Paytm announced that it is going to expand its credit distribution business and enhance focus on higher ticket loans for consumers and merchants in partnership with banks and NBFCs.
Following the focus on higher ticket loans, it is going to reduce the small ticket loans of less than Rs. 50,000. Observers noted that this move would impact the overall loan originations through the platform, as the specific segment constitutes over 50 percent of total disbursements.
As per the recent data of November 2023, 70 – 73 percent of Postpaid loans were under the Rs 50,000 mark. Under Paytm’s personal loan product, such low-ticket loans accounted for 3 – 5 percent. They contributed 4 – 6 percent of the merchant loans that the company extends.
Currently, it has 7 NBFC partners for loan distribution and is in the process of integrating 1 large Bank and 2 large NBFCs, which will be completed during Q4 FY 2024 and Q1 FY 2025, it has 3 credit card partners and integration with one more bank is in process, with a key focus on Rupay Credit card.
Leading global investment bank Goldman Sachs has downgraded Paytm to “neutral) from the earlier rating of “buy,” and has cut its price target substantially to from Rs. 1,250 to Rs. 840.
The company’s revenue from operations grew by 60.59 percent from Rs. 4,972.3 Crores to Rs. 7,985.2 Crores accompanied by decreasing losses of Rs. 2,392.9 Crores to Rs. 1,775.9 Crores.
One 97 Communications(Paytm) is one of India’s leading payment apps with a digital ecosystem offering consumers and merchants a wide range of services which involves comprehensive payment solutions, payment facilitator services, facilitation of consumer and merchant lending, wealth management, Insurance broking services, and many more.
Written by: Bharath K.S
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