Paytm Shares Dip Despite Loan Disbursals Jumping 296% YoY, Increase In User Base

Paytm shares were trading lower in early trade on Friday even as the company’s loan distribution business (in partnership with top lenders) continues to witness accelerated growth with disbursements through our platform now an annualised run rate of over Rs 25,000 crore in July.

The company reported that consumer engagement is at its highest on Paytm Super-App with average monthly transacting users (MTU) at 77.6 million for the month of July 2022, up by 41 per cent on a y-o-y basis.

The company witnessed an 82 per cent yoy jump in merchant payment volumes (GMV) for the month at Rs1.06 lakh crore ($13 billion).

At around 10.35 AM, One 97 Communications was trading at Rs780 down by 5.51 per cent from its previous closing of Rs 825.50 on the BSE. The scrip opened at Rs 820 and touched intraday high and low of Rs 820 and Rs 775 respectively.

It also comes a day after the Advisory firm Institutional Investor Advisory Services India Limited (IiAS) flagged the proposal to reappoint Vijay Shekhar Sharma as the Chief Executive Officer (CEO) of Paytm for another five years and also opposed the remuneration decided for the position. The advisory firm advised shareholders to vote against the move, ahead of Paytm’s annual general meeting (AGM) on August 19.

What Should Investors Do?

ICICI Securities said in the report that there will be no change in the revenue model for Paytm due to the new regulatory framework as all charges are already transparently disclosed and paid directly to the lenders. “Convenience fee is paid by customers to lenders and lenders pay it back to LSPs as a part of distribution or collection revenue sharing. Paytm does not collect any charges directly from the borrowers. Also, MDR is paid by merchant to LSPs and the regulation does not have any bearing on MDR earned,” it said. The brokerage maintains a ‘buy’ rating on the Paytm stock with an unchanged target price of Rs 1,285 based on the customer lifetime value methodology.

Meanwhile, Goldman Sachs has also said that Paytm’s financial services business practices are in line with the key points, per the final guidelines issued by the RBI on digital lending. It believes that the guidelines should result in a limited-to-no impact on Paytm’s monetisation model and should help remove one of the key overhangs on the stock. “Regulations have remained a key focus area for Paytm investors, and recent developments such as digital lending guidelines, UPI through credit card, RBI’s payments vision document, etc. are largely neutral/positive for Paytm in our view. “Apart from this, on the regulatory front, removal of any overhang on MDR (merchant discount rate; timeline unclear) could be another catalyst,” it said. The foreign brokerage has a ‘buy’ rating on the stock with a target price of Rs 1,100 per share.