Macquarie slashes Paytm share target price for the 4th time to Rs 450; stock hits another 52-week low

Macquarie Capital Securities (India) Pvt has slashed Paytm share target price further from Rs 700 per share to Rs 450 a share

Maintaining 'underperform' rating, the brokerage had first reduced target price to Rs 1200 a share on November 18, 2021. Source: Reuters

Macquarie Capital Securities (India) Pvt has slashed Paytm share target price further from Rs 700 per share to Rs 450 a share, stating 'the company faces tough time ahead'. It is the fourth time that the brokerage has cut the target price of the shares of India's digital payment solutions provider since their listing on stock exchange last year.

Maintaining 'underperform' rating, the brokerage had first reduced target price to Rs 1200 a share on November 18, 2021, it was followed by further downgrade to Rs 900 on January 10 this year and to Rs 700 per share on February 7. The brokerage has maintained 'underperform' ratings on all these occasions.

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Slashing expected price to sales growth multiple from 0.35x to 0.2x and downgrading sales valuation from 7x to 4.5x, the brokerage observed that the recent developments related to Paytm will minimise its chances of securing banking licence.

It said Fintech companies need to explore beyond lending and distribution in the long term to stay competitive.

It was of the view that Paytm may face the challenge of generating cash flow due to increasing competition from other fintech companies.

Besides, putting cap on wallet charges in digital payment paper and likely stricter BNPL (Buy Now Pay Later) and KYC norms would further impact the company.

Morgan Stanley on Paytm

Another brokerage house, Morgan Stanley, has maintained 'equalweight' with target price of Rs 935, which translates into an upside of 47% on Wednesday's closing price of Rs 634 per share on the BSE.

Consensus recommendation of 8 analysts

Meanwhile, consensus recommendation from 8 analysts covering One97 Communications Ltd is HOLD with an average estimate of Rs 1260.6 per share, as per trendlyne.com

On Thursday, shares of Paytm dropped another 10% to trade on new 52-week low of Rs 572.25 a share. The shares traded on 52-week high of Rs 1961.05 per share on the BSE on November 18, 2021, the day Paytm was listed on the bourses. Paytm has so far corrected more than 70% from its 52-week high as on March 17.

(Disclaimer: The views/suggestions/advice expressed here in this article are solely by investment experts. Zee Business suggests its readers to consult with their investment advisers before making any financial decision.)

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