Paytm has made a big new bet. Will it pay off?
Subscribe to enjoy similar stories. Since its debut on Dalal Street three years ago, Paytm has been battling several challenges. There were high expectations that its initial public offering (IPO), which raised ₹18,300 crore, would lead to a blockbuster listing.
However, investors oversubscribed just 1.89 times, and their enthusiasm turned to despair when the stock was listed at ₹1,950, a 9% discount to the issue price of ₹2,150. On the day of Paytm's market debut, Macquarie dropped a bombshell, saying its business model lacked focus and direction. According to an article in Mint, it cut its target price by 40% to ₹1,200, calling the business a cash guzzler.
It also said Paytm's focus on multiple business lines limited its ability to dominate any category except wallets, which were losing relevance due to UPI growth. Competition and regulations may hurt its unit economics and growth, Macquarie said, adding that Paytm must focus on lending. Also read: Gold is bouncing back.
Is now the time to dig in for big returns? It didn’t stop there. In March 2022, Macquarie once again lowered its target price to ₹450. A year later, it raised it to ₹800.
Then in February 2024 it once again lowered the target to ₹275 after the Reserve Bank of India (RBI) imposed curbs on Paytm’s payments bank. The stock hit a low of ₹310 in May 2024 down 85% from its issue price. However, it has surged 200% since then to a recent high of ₹939.
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