Paytm retail and MF investors say 'Paytm Karo'; stock added to MSCI small cap index

One97 Communications, which operates the popular digital payment company Paytm, has been included in the MSCI Emerging Markets Small Cap Index.

This inclusion reflected the increasing confidence of both domestic and international investors in Paytm, as seen by the significant stake increases from foreign portfolio investors (FPIs), domestic investors, and leading Mutual Funds like Mirae and Nippon India Mutual Fund.

Paytm is one of 29 stocks included in the MSCI Small Cap Index, likely driving USD 273 million inflows, crucial for benchmarking Indian companies internationally.

The inclusion is part of MSCI's routine review aligning with evolving market conditions, set for May 31, 2024. MSCI (Morgan Stanley Capital International) is a global leader in equity, fixed-income, and hedge fund indices.

Indian mutual funds increased their holdings in Paytm during the March quarter of 2023-24. Specifically, Mirae Mutual Funds increased their shareholding to 2.39 crore shares (3.76 per cent), while Nippon Mutual Funds raised their stake to 1.66 per cent from 1.05 per cent over the same period. As a result, domestic institutional investors (DII) witnessed an increase in stake to 6.86 per cent from 6.06 per cent.

According to the shareholding pattern available with the stock exchanges, domestic mutual funds raised their stake in Paytm by 1.77 per cent, reaching 6.15 per cent from 4.99 per cent at the end of the December quarter of the fiscal year.

Retail investors' shareholding also went up from 12.85 per cent to 14.53 per cent sequentially while Non-Resident Indians (NRIs) also saw an increase from 0.67 per cent to 0.85 per cent.

Meanwhile, FPI shareholding in Paytm rose by 2.49 per cent to 20.19 per cent in Q4-2023-24 as new investors including Tiger Pacific Capital, Societe Generale and Norway's Government Pension Fund Global invested in the stock.

In February this year, Morgan Stanley Asia (Singapore) Pte. - ODI purchased 50 lakh shares of Paytm worth Rs 243.6 crore in a bulk deal, the company said.

Abhilash Pagaria, head, of Nuvama Alternative and Quantitative Research, remains extremely bullish on India, especially with active participation from mutual funds and HNI/retailers in the Indian equity markets. Paytm has 60.4 per cent holdings by FIIs as of the March quarter of 2023-24.

Following NPCI's approval on March 14, 2024, to onboard OCL as a Third-Party Application Provider (TPAP) on the Multi Payment Service Provider API Model, Paytm has expedited the integration with Axis Bank, HDFC Bank, State Bank of India (SBI), and YES Bank.

All four banks are now operational on the TPAP, streamlining the process for Paytm to shift user accounts to these PSP banks.

The digital payment company is now focusing on UPI Lite wallet to move the users who prefer wallets for low-value everyday payments. Paytm UPI Lite acts as an on-device wallet, allowing users to store funds and make payments on the go. It offers lightning-fast payments that never fail with no pin requirement.