Paytm loses over $1 billion in market value in a day; here’s what happened

New Delhi: On Thursday, the parent firm of Paytm, One97 Communications, saw a 19% decline in its stock. The shares fell 18.74 percent to settle at ₹660.70 on the National Stock Exchange at the conclusion of the day. The shares ended at ₹661.30 each after plunging 18.69% on the Bombay Stock Exchanges.

The company’s declaration that it would slow down on loans under ₹50,000 and concentrate on larger loans set off the carnage. The business said that it will prioritize the merchant side above the customer side. “We want to exert much more effort there. Paytm’s President and Chief Operating Officer, Bhavesh Gupta, said on Wednesday, “Our focus now on the calibration of business is on high ticket, slowing down to less than ₹50,000.”

The decline in share prices wiped market value of more than $1 billion. For the Noida-based corporation, this is the largest decline in share prices in the previous two years.

At least five brokers, including Goldman Sachs Group Inc., JPMorgan Chase & Co., and Citigroup Inc., cut their ratings after the company’s announcement that it would restrict loans below ₹50,000, according to Bloomberg.

Because credit card debt and personal loans are unsecured, the Reserve Bank of India requested in November that lenders increase their provisions against them. The change could reduce consumer spending.

Although the move helps Paytm recruit clients, Citigroup’s analysts said in a report that it may have an impact on the company’s medium-term growth prospects. The stock was lowered from buy to neutral.

Additionally, it projected a 20 percent decline in Paytm’s operating profit for the 2024–2025 fiscal year. It further said that over 75% of Paytm loans were for less than ₹50,000.