Paytm’s Stock Price Target Cut To Rs. 450 By Analyst Firm Macquarie

Paytm’s share has been in freefall since being listed last year, and if an analyst firm that that correctly predicted its price on three previous occasions is to be believed, there’s further pain in the offing.

Analyst firm Macquarie has slashed Paytm’s price target to Rs. 450 per share. “Recent developments significantly reduce the probability of getting a banking license to lend,” the firm said, referring to RBI’s penalty on Paytm Payments Bank which prevents it from adding new customers until an IT audit. “Other regulatory headwinds include the digital payments paper potentially capping wallet charges and tougher BNPL and KYC regulations. We cut our target price by 36% to Rs. 450 on lower target multiples,” the report said.

The report added that its lowered price target was primarily because of fintech companies commanding lower multiples around the world. “Globally, Fintechs have corrected sharply. When we initiated on PayTM fintechs globally traded at 0.3x-0.5x PSg (price to sales growth ratio). However, multiples have now declined to 0.07x-0.35x. Our benchmark valuation for PayTM has been the valuation of global fintechs. As a result, we now value it at 0.2x PSg vs the 0.35x PSg used earlier, thereby arriving at a fair price of Rs450. Note that we haven’t changed our earnings or revenue estimates for PayTM,” the report said.

Now analyst firms often issue reports and price targets — there are several reports out that they indicate a 100% upside for Paytm from its current stock price — but Macquarie has been eerily accurate with its previous price targets on Paytm. When Paytm had gone public at a price of Rs. 2150, Macquarie had stuck its neck out and said that the stock was worth only Rs. 1200. Paytm’s share had crashed nearly 40% in its first two days of trade, and after staging a brief recovery, had touched the levels of Rs. 1,200 that Macquarie had predicted. At that point, Macquarie had come out with another report, this time cutting its price target to Rs. 900. Paytm’s share dutifully followed the report, falling to a low of Rs. 881. Last month, Macquarie had further cut Paytm’s share price target to Rs. 700, and Paytm had again fallen in the weeks that followed, and currently trades at just Rs. 634 per share.

Paytm’s stock is already in the doldrums, having lost nearly 70 percent of its value in the last few months, but a fall to Rs. 450 could be a stunning unravelling of what was once India’s highest-valued startup. Paytm had gone public at a valuation of nearly $20 billion, but will be valued at just around $4 billion if its stock does end up where Macquarie predicts it will. The ride down for the stock hasn’t been fun — investors have lost over Rs. 1 lakh crore in the process, and Paytm CEO Viay Shekhar Sharma has lost his billionaire status as the stock as plummeted. But a fall to Rs. 450 — an 80 percent correction from its IPO price — could not only all but kill any upcoming tech IPOs, but also send shockwaves down India’s entire startup ecosystem as a whole.