Paytm shares fall over 7% after NPCI data shows no UPI market share gains in December

Over the past three months, Paytm's shares have gained over 22 percent

Shares of One97 Communications, the parent company of payments aggregator Paytm, dropped by up to 7.5 percent to Rs 907 per share on January 8, following UBS's report that Paytm did not gain any UPI market share in December, according to NPCI data.

Despite receiving approval to add customers in October, Paytm's share of the UPI market has nearly halved, falling from 10 percent at the start of 2024 to just 5.5 percent by the end of the year. Even during the October-November period, Paytm's market share remained stagnant at 5.5 percent.

Paytm's monthly transacting users (MTUs) also declined by nearly 100 million, dropping from 168 million at the start of 2024 to 68 million by the end of September 2024. UBS analysts emphasized that growth in MTUs is critical for B2C offerings, maintaining a "neutral" rating on Paytm with a target price of Rs 1,000 per share.

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In a recent note, Mirae Asset Capital Markets projected that Paytm would achieve breakeven at the net profit level by Q4FY26, driven by a greater contribution from financial services to its revenue. Despite regulatory setbacks that reduced monthly transactions (71 million in Q2FY25 compared to 100 million in Q3FY24), Paytm's merchant base has remained steady at 42 million due to strategic efforts to retain existing merchants on its platform.

For the upcoming quarter, analysts at Motilal Oswal forecast a 10 percent quarter-on-quarter (QoQ) increase in Paytm's gross merchandise value (GMV) to Rs 4.9 lakh crore in Q3FY25. They also expect an 8 percent QoQ rise in revenue from operations to Rs 1,800 crore, with a 14 percent QoQ increase in contribution profit to Rs 1,012 crore in Q3FY25.

Earlier, Paytm reported a consolidated profit of Rs 928.3 crore in Q2FY25, boosted by the sale of its movie ticketing and events business to Zomato.

Paytm is covered by 17 brokerage firms, with 6 recommending "buy," 6 issuing "hold" ratings, and 5 giving "sell" calls.

Over the past three months, Paytm's shares have gained over 22 percent, outperforming the Nifty 50's 4 percent decline. However, the stock still trades more than 50 percent below its IPO price of Rs 2,150 per share.

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