Payqu, the launch of digital payments in India, whose shares have fallen 71% since its launch in the November market, has further lowered its price target by Macquarie Capital Securities (India) Pvt. the analyst was too early to predict the company’s problems.
Macquarie’s Suresh Ganapathy lowered its price estimate to Rs 450 ($ 5.90) from Rs 700, citing lower valuations from fintech companies worldwide. He did not change his earnings or earnings estimates on Paytm due to poor performance. Shares rose to Rs 634.05 on Wednesday.
Paytm launched the largest initial public offering in India, but has faced many challenges since then. Ganapathy cited fintech regulations and stricter compliance rules as a potential headwind – on Friday, the Reserve Bank of India banned Paytm Payments Bank from accepting new customers, adding pressure to stocks.
The 12-month average price target among the nine analysts covering Paytm is Rs 1,203, according to data collected by Bloomberg. Prior to the listing, analysts including Macquarie, including Ganapathy, began hedging with a low-yield valuation and a price target of Rs 1,200. The IPO was priced at Rs 2,150.
One 97 Communications Ltd., the initial public offering of Paytm’s parent company, was touted as a symbol of India’s growing attractiveness as a destination for global capital, especially for investors looking for alternatives to China.
India’s Unified Payment Interface, which allows for immediate transfer of funds, has an open architecture. Therefore, a large user base does not necessarily make a particular service provider more competitive in the system than others, according to a note from Moody’s Investors Service.
“In addition, major Indian banks have significantly increased their digital product offerings and are able to keep up with the competition in fintech,” Moody’s analyst Srikanth Vadlamani wrote in a statement on Thursday.
(This story was not edited by NDTV staff and was automatically created from a union feed.)