Paytm shares crash 6% as Jefferies maintains 'hold', sees marginal upside

Paytm shares have crashed nearly 30 percent since the start of the year.

Shares of One 97 Communications Paytm plunged as much as 6 percent to Rs 718 in morning deals on March 20 after international brokerage Jefferies maintained its 'hold' call on the counter suggesting a few roadblocks that could hinder the growth prospects of the company.

With a price target of Rs 850 per share, analysts forecast an upside potential of 11.4 percent from the last close of Rs 763 per equity share. Paytm shares have crashed nearly 30 percent since the start of the year.

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For FY25, government incentives for low-value UPI P2M transactions have been halved to Rs 1,500 crore, reducing incentives from 20 bps to 6 bps. If Paytm’s incentives decline proportionately, its adjusted EBITDA for FY25 could be 50 percent below estimates, while FY26-27 projections maybe 20-30 percent lower, Jefferies said.

Pre-tax profit (PBT) for FY25 could also see a 15 percent hit. Jefferies will closely monitor the company’s shift to MDR-based charges for large merchants, which could boost profitability and enhance revenue predictability.

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The development gains significance as this comes just a few days after it received SEBI's approval on Paytm Money providing services as a research analyst. Therefore, now the payment services platform owned by One-97 Communications will be able to provide SEBI-compliant research services, including investment insights, research reports, and data-driven analysis.

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Earlier this month, Paytm had also launched automatic payment deductions from bank accounts for trading on equity broking apps. ‘UPI Trading Blocks’ is a part of an automated process that is based on NPCI’s UPI infrastructure wherein funds are deducted during trade execution. It doesn't require the users to enter a UPI PIN for transactions at each time of its occurrence. This setup provides greater transparency, as the money stays in the investor’s bank account until required for a trade.

At about 10:20 am, shares of the company were trading at Rs 728, lower by 5 percent from the last close on the NSE.

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