Paytm shares tumble over 5% amid Jefferies outlook; check latest developments

Shares of Paytm parent firm One 97 Communications tumbled over 5% on Thursday, March 20, a day after its arm got the nod from the market regulator for research analysis.

The drop comes as global brokerage Jefferies on Thursday shared its outlook for the fintech company. The brokerage suggested a few roadblocks that could hinder the growth prospects of Paytm.

“For FY25, the government’s incentives of ₹1,500 crore for low-value UPI P2M transactions are half of last year’s,” the brokerage said. This implies incentives falling from 20 basis points (bps) to 6 bps. Jefferies further said that Paytm’s incentives fall proportionately; adjusted EBITDA for FY25 may be 50% below estimates.

The broking also said for the next financial year (FY26-27), EBITDA will likely be lower by 20-30%. Meanwhile, its profit before tax could be lower by 15% in FY25.

Following this, at 10:17 AM, shares of Paytm were trading at ₹722.15 apiece, declining as much as 5.37%. The stock has lost 4.03% over the last one-month period, while year-to-date, the scrip has lost over 26%.

The fintech firm’s market capitalisation stands at ₹46,425.18 crore.

1. One 97 Communications, on Tuesday, March 18, said that it has received market regulator SEBI’s nod on Paytm Money providing services as a research analyst.

With this registration, Paytm Money Limited can offer SEBI-compliant research services, including investment insights, research reports, and data-driven analysis.

2. The Enforcement Directorate (ED) on March 3 said it had issued a ₹611 crore worth show cause notice to One 97 Communications and linked entities for "contravention" of the FEMA on various counts.

The notice was issued by a special director of the federal agency before the initiation of adjudication proceedings.

The show cause notice was issued to One 97 Communication Limited (OCL), its managing director and other Paytm subsidiary firms like Little Internet Pvt Ltd and Nearbuy India Pvt Ltd for contraventions of the provisions of the Foreign Exchange Management Act (FEMA) to the tune of around ₹611 crore.

3. Last month, Paytm parent One97 Communications partnered with US-based AI company Perplexity to integrate artificial intelligence-powered search capabilities into its app.

The collaboration will allow users to ask everyday questions, explore topics in their local language, and make informed financial decisions using AI-driven insights, Paytm said in a statement.

4. The Department for Promotion of Industry and Internal Trade (DPIIT) signed a memorandum of understanding (MoU) with Paytm in February to foster innovation and accelerate the growth of manufacturing and fintech startups in India.

Under the partnership, Paytm will extend mentorship, infrastructure support, market access, and funding opportunities to startups. The partnership aims to support fintech hardware startups through mentorship and innovation guidance, helping them develop and scale payment and financial technology solutions.

Paytm had narrowed consolidated net losses to ₹208.3 crore in the December quarter of the current fiscal year. In the year-ago period, the net loss stood at ₹219.8 crore.

Revenue from operations declined 35.8% to ₹1,827.8 crore as compared to ₹2,850.5 crore in the corresponding period last fiscal.

Its revenue from payment services stood at 1,059 crore, up 8% quarter on quarter (QoQ). Financial services revenue climbed 34% QoQ to ₹502 crore.

Paytm's merchant subscriber base for devices has grown to 1.17 crore as of December 2024, an addition of five lakh QoQ.

Last week, the Paytm board had approved the employee stock ownership plan (ESOP) of 109,995 stock options to its eligible employees.