Paytm, the Indian digital payments startup whose stock is down 71% since its market debut in November, had its price target lowered further by a Macquarie Capital Securities (India) Pvt. analyst who early predicted the company’s problems.
Macquarie’s Suresh Ganapathy lowered its price estimate from Rs 700 to Rs 450 ($5.90), citing lower valuations for fintech companies worldwide. He has not changed his earnings or earnings estimates for Paytm, which he believes are underperforming. The stock rose to 634.05 rupees on Wednesday.
Paytm made the largest IPO ever in India, but has faced many challenges since then. Ganapathy cited fintech regulations and stricter compliance standards as possible headwinds — on Friday, the Reserve Bank of India banned the company’s Paytm Payments Bank business from accepting new customers, putting pressure on its stock.
The average 12-month price target among nine analysts covering Paytm is Rs 1,203, according to data collected by Bloomberg. Ahead of the listing, Macquarie analysts, including Ganapathy, started off with an underperform rating and a price target of Rs 1,200. The IPO was priced at Rs 2,150.
The IPO by One 97 Communications Ltd., Paytm’s parent company, has been touted by some as a symbol of India’s growing appeal as a destination for global capital, particularly for investors seeking alternatives to China.
India’s Unified Payment Interface, which allows instant money transfer, has an open architecture. So a large user base doesn’t necessarily make a particular service provider more competitive than others on the system, according to a Moody’s Investors Service note.
“In addition, India’s largest banks have significantly improved their digital product offerings and are resilient to competition from fintechs,” Moody’s analyst Srikanth Vadlamani wrote in the note on Thursday.
(This story was not edited by DailyExpertNews staff and was generated automatically from a syndicated feed.)