More Trouble For Paytm As Macquarie Further Slashed the Target Price to Rs 450

Looks like Paytm's trouble is far from over as its shares continue to decline. Now Macquarie, a global investment bank, has slashed Paytm's target price to Rs 450 from Rs 700, citing "tough times ahead."

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Looks like the troubles for Paytm are far from over! Today morning, Paytm’s stock was trading at around Rs 620, down nearly 2 percent from the previous close on the National Stock Exchange. Surprisingly, the current price is 70 percent lower than the IPO issue price of Rs 2,150.

Macquarie, a global investment bank, has slashed Paytm’s target price to Rs 450 from Rs 700, citing “tough times ahead.” That’s a notable decline of 36%.

It is important to note that this is the fourth time when Macquarie has cut Paytm’s target price. It had previously been set at Rs 1,200 in November 2021, Rs 900 in January 2022, and Rs 700 in February 2022.

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According to the Macquarie Capital Securities India, Paytm is now valued at 0.2 times price to sales growth ratio, down from 0.35 times previously, resulting in a fair price of Rs 450.

“Given this, and competition from other fintechs in the payments space, we remain skeptical about Paytm’s longer-term ability to generate free cash flow,” the Macquarie report read.

The constant decline in Paytm stock value has a direct impact on the market value of the company. Paytm’s current market capitalization is Rs 40,360 crore ($5.3 billion), down from Rs 1.4 lakh crore ($19.9 billion) at the time of its IPO debut. Since its listing, the Indian fintech firm has wiped out Rs 1 lakh crore of investors’ wealth, including many high-profile investors such as Warren Buffett.

Paytm share price is expected to hit the Rs 500-550 mark soon, according to Indian stock brokers Manoj Dalmia of Proficient Equities, Ravi Singh of Share India, and Anuj Gupta of IIFL Securities.

Ravi Singh, vice president and head of research at Share India, and Likhita Chepa, senior research analyst at CapitalVia Global Research, both have advised investors to avoid buying Paytm stock until it stabilizes. As the losses of One97 Communications have increased, it appears that the company is unable to find a route back, according to Likhita.

Last week, the Reserve Bank of India (RBI) barred Paytm’s Payments Bank from onboarding new customers and ordered it to conduct a comprehensive system audit of its IT system.

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