Macquarie downgrades Paytm stock; what are the pain points?

Macquarie on Paytm: Global brokerage Macquarie has downgraded Paytm stock to 'Neutral' from 'Outperform'. The target price stands at Rs 800. After a long time, Paytm has seen any downgrade, according to Zee Business Research. It must be noted that in February this year, Macquarie upgraded the stock to 'Outperform' from 'Underperform' with a target price of Rs 800.

Paytm: Rationale behind downgrade

One of the reasons behind the downgrade is the stock's sharp rally this year. So far this year (year-to-date basis), the stock has rallied around 59 per cent. Hence, for the time being, the brokerage feels there is no steam left in the stock. There has been no change in Paytm's earnings estimates. It further said that the company will swing into profit by FY26. 

Key concerns

Macquarie, in its report further said, that the stake sale by ANT Financial is a matter of concern. ANT Financial has approximately a 25 per cent stake in Paytm, Zee Business reported, quoting Macquarie. Besides, the entry of Jio Financial Services into the business has also worried analysts at the brokerage. Macquarie further said that going ahead, there will be ups and downs in Paytm's lending business volumes.

At the time of writing this news, the stock was trading nearly 2 per cent higher at Rs 855.10 on the BSE. Its 52-week high level stands at Rs 915, which was touched on June 19. 

Paytm Q4

Digital financial services firm One97 Communications, which operates under the Paytm brand, last month posted a narrowing of consolidated loss to Rs 167.5 crore in the fourth quarter ended March 31, 2023. The company posted a loss of Rs 762.5 crore in the same period the last year. The consolidated revenue from operations of the company grew 51.5 per cent to Rs 2,334.5 crore in the quarter under review from Rs 1,540.9 crore in the March quarter of FY22. For the year ended March 31, 2023, One97 Communications reported a narrowing of loss to Rs 1,776.5 crore from Rs 2,396.4 crore in the previous fiscal. READ MORE