If the 35% fall in Paytm was not enough, Macquarie believes the pain is not over for the fintech. The brokerage initiating coverage with an Underperform rating expects Paytm stock to fall all the way to their target of Rs 1200/share vs it's issue price of Rs 2150, implying a 45% fall.
Here is Macquaire's take on Paytm-:
- We believe PayTM’s business model lacks focus and direction.
- Achieving scale with profitability a big challenge; company is a cash guzzler
- Unless PayTM lends, it can’t make significant money by merely being a distributor
- Obtaining a small finance bank license could be difficult in our view given that Chinese controlled firms own more than a 30% stake in PayTM.
- Not enthused with the company’s complicated organisation structure, related-party transactions, churn in top management and a thinly staffed board with 75% of members being based out of India.
Paytm marketcap has eroded over Rs 50,000 cr in just two sessions of trade.