MC Markets Graphixstory: Paytm Price Targets Slashed 20-60% Following RBI Order

by | Feb 14, 2024 | 0 comments

Understanding Paytm’s Recent Market Challenges

Recently, Paytm’s financial world got a bit shaky after the Reserve Bank of India (RBI) decided to put some restrictions on Paytm’s banking arm. This decision made some big investment firms rethink how much Paytm’s stock is worth, leading to a drop in their target prices for Paytm by quite a bit. In our story today, we’re breaking down what’s happening with Paytm and what it might mean for the future.

What the Experts Say

After the RBI’s move, some big names in the investment world, like CLSA, Morgan Stanley, Jefferies, and Bernstein, adjusted their predictions for Paytm, lowering their price targets by 20-60%. Macquarie went even further, becoming the most cautious of the bunch.

There’s a bit of disagreement on what the RBI’s decision means for Paytm’s loan business. Some think it could scare away customers, which would make it harder for Paytm to give out loans. Others feel the impact will mostly be on Paytm’s digital wallet service, which is a big part of what they do, with over 33 crore wallets under their management.

A Closer Look at Macquarie’s Take

Macquarie, an investment firm, was particularly stern, downgrading Paytm’s stock and cutting their price target from Rs 650 to just Rs 275. They’re worried that Paytm’s partners in the lending world might back off because of concerns about Paytm’s reputation.

This comes after a previous year where Macquarie had actually upgraded Paytm’s stock, showing how quickly things can change in the world of finance.

Other Opinions

Dolat Capital Markets, on the more optimistic side, thinks Paytm has already considered the worst-case scenario from these recent troubles and estimates an impact of Rs 300-500 crore on their earnings before interest, taxes, depreciation, and amortization (EBITDA).

Jefferies, another investment firm, also slashed their target price for Paytm, expecting the RBI’s decision to hit Paytm’s earnings hard, especially in the wallets and payments side of the business. They also worry about Paytm’s reputation affecting its business partnerships.

The Bottom Line

With all these adjustments and concerns, Paytm’s stock has taken a hit, dropping over 50% in just two weeks. It’s a tough time for Paytm, and many are watching to see how they’ll handle these challenges.

Wrapping Up

Paytm’s facing some tough times, with regulatory hurdles and differing opinions from investment firms. As we keep an eye on these developments, it’ll be interesting to see how Paytm adapts and moves forward.

Disclaimer: Investment opinions and tips on Stockmarkets.co.in are solely those of the individual experts and do not reflect the stance of the website or its management. For investment decisions, Stockmarkets.co.in recommends consulting with qualified professionals.

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