Paytm Shares Plunge 20 Percent for Second Consecutive Day, Nearing Record Low
By siliconindia | Friday, February 2, 2024
Paytm shares are currently experiencing another 20 percent lower circuit after a 20 percent decline on Thursday. The stock is currently valued at Rs 487, approaching its previous all-time low of Rs 438 in March 2022. Following the Reserve Bank of India's actions on Paytm Payments Bank, founder Vijay Shekhar Sharma conducted an analyst call, characterizing the situation as a "speed bump." He expressed confidence that through collaborations with other banks, the company will navigate through the challenges in the upcoming days or quarters.
Following Jefferies' initial downgrade of Paytm in response to recent developments, additional analysts have also downgraded the stock. JPMorgan, in particular, has shifted its rating to Underweight, citing concerns about risks to the profit pool, competitive advantage, and increasing regulatory challenges. The brokerage has additionally reduced its price target for the stock from Rs 900 to Rs 600. "The order materially impacts Paytm's core payments business impacting payment revenue growth and net payment margins", JPMorgan wrote in its note.
CLSA has adjusted its price target for Paytm, reducing it from Rs 960 to Rs 750, while keeping its buy recommendation on the stock. The brokerage acknowledged the potential for near-term volatility in the stock price. It has revised Paytm's EBITDA ex-ESOPs estimates by 18 percent and 22 percent for the financial years 2026 and 2027, respectively, and also lowered its GMV growth estimates by 8 percent.
Paytm has witnessed downgrades from JM Financial and Axis Capital, with Axis Capital now holding the lowest target on the street at Rs 450, nearing its historical low. Axis Capital has shifted its rating from "add" to 'sell'. JM Financial, too, has reduced its target for Paytm from Rs 1,120 to Rs 590 and downgraded its rating from 'buy' to 'sell'. Among the 15 analysts covering Paytm, four now have a 'sell' rating, while seven still advocate a 'buy' recommendation.
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