In today’s trading, shares of One97 Communications, the company that owns the digital payment app Paytm, fell and locked at the lower circuit limit of 20%, hitting 650 a share. The company’s announcement of plans to reduce small-ticket loans coincided with this steep decline.
After experts downgraded the stock and the business chose to gradually reduce the number of unsecured loans under Rs 50,000, Paytm’s shares fell to reach the 20% lower circuit. “The portfolio of postpaid loans consists primarily of loans under Rs 50,000.
Based on the macroeconomic changes and existing regulatory advice, we have made the calculated decision to continue decreasing the Rs 50,000 portfolio, particularly the postpaid loan.” Paytm’s president and COO, Bhavesh Gupta, stated this during a conference call on Wednesday. In response to regulators’ and lending partners’ concerns about systemic risk, JPMorgan sharply moderated the distribution of its ticket loans, a move the company described as a “profit warning”. The research group stated in a report that the corporation is predicting a 40–50% decline in low-ticket lending due to increased bottom-scaping of clients with lower limits and growing system-level concerns around low-ticket unsecured lending.
“We assume a sustained slowdown in BNPL and even PL over FY24/25, and do not give credit on offsets via pick-up in Merchants loans/high tickets loans or any flexibility that Paytm may have on direct costs.”
