• Paytm experiences a 20% stock drop as it shifts focus to higher-ticket personal and commercial loans.
  • The move is driven by regulatory concerns, prompting Paytm to adopt an "ultra-conservative" stance.
  • Financial analysts lower revenue and EBITDA estimates, anticipating an impact on Paytm's lending segment.

Paytm witnessed a 20% drop in shares following the announcement of plans to issue fewer personal loans under 50,000 Indian rupees ($600). The move aims to shift towards higher-ticket personal and commercial loans, aligning with regulatory concerns about small personal loans. The decision prompts concerns among fintech investors.

Paytm adopts 'Ultra Conservative' stance amid regulatory landscape

Attributing the strategic shift to recent macro developments and regulatory guidance, Paytm expresses its intent to be "ultra-conservative." The company plans to expand its loan portfolio, targeting lower-risk and high-credit-worthy customers. Analysts note the growing conservatism in the financial system and the potential impact on Paytm's lending segment.

Financial analysts lower revenue estimates in response

Financial analysts reacted to Paytm's announcement by lowering revenue and adjusted EBITDA estimates for FY24 through FY26. Goldman Sachs projects a decline in disbursal growth for FY25 and identifies lending as a critical driver of Paytm's profitability. The move impacts the growth momentum and returns on equity profile for unsecured lending in the sector.

Edited by Shruti Thapa