Motilal Oswal Cuts Target Price For Paytm After Payment Company’s Worst Share Price Downfall – News18

In what came as the worst day for the company, the shares of One 97 Communications Ltd., the parent company of payments platform Paytm, came down in a lower circuit of 20%. This is the worst fall the company has witnessed ever since its announcement to scale back small ticket loans, and amend its Buy Now and Pay Later (BNPL) business.

Owing to the downfall in the share price, the analysts have either downgraded or cut their price targets on the Paytm stock over the next 12 months. On the other hand, Paytm, in a recent analyst call on Wednesday, unveiled its strategic plans to serve the growing demand for higher ticket-size loans. These ticket-size loans range from Rs 3 lakh to Rs 7 lakh. Meanwhile, the company also highlighted the increased demand for low-risk personal loans and merchant loans.

Siddhartha Khemka, Head of Retail Research at Motilal Oswal Financial Services, praised the recent strategic move adopted by Paytm. He implied the positive impact of the move not only for the leading payments platform but also for other non-banking financial companies (NBFCs) as well.

He added, “There was some exaggeration in the reaction to what Paytm share prices did yesterday. What we generally see in the market is that the market reacts sharply either way, be it on the fear side or the greed side.”

Khemka further acknowledged, “The adjustment pertains to a relatively small portion, around 4-5% of personal loans in the less than ₹50,000 category, and postpaid loans contribute insignificantly to the overall loan book, it sheds light on potential concerns regarding the disbursement of retail loans.”

Khemka lowered the target price to ₹1,025 while highlighting its substantial upside from a one-year perspective at the same time. Explaining the same, he said that Motilal Oswal maintains a positive view on Paytm though it has lowered the target price, which is still higher than the current level.