Fair On Paytm's Part To Go Slow, Say Analysts As Firm Focusses On Large Ticket Personal, Merchant Loans

Paytm is adding new forms of loan offerings with focus on driving healthy portfolio for lending partners

Paytm eyes robust growth in merchant loans and healthy growth in personal loans, aided by higher ticket size lending.

Paytm in an update on loan distribution business, announced to redouble their effort on large ticket personal and merchant loans, targeting lower risk and high credit worthy customers, in partnership with large banks and NBFCs.

"It's fair on Paytm's part to go slow, as other small players were not doing the thing in the sector," said Digant Haria from Greenedge Wealth Services as he shared his thoughts in a TV interview. "There is a risk associated with asset-like models where you don't have a choice when to grow or to scale down your book," he added.

Avinash Gorakshakar, head research of Profitmart Securities Pvt. Ltd, in an interview to another television channel, said: "I believe somebody who's looking at the next two years should definitely look at buying Paytm stock at these levels, as it looks attractive from a longer-term perspective."

Paytm is said to be adding new forms of loan offerings with a focus on driving a healthy portfolio for lending partners. The fintech giant eyes robust growth in merchant loans and healthy growth in personal loans, aided by higher ticket size lending, it is learnt.

Global brokerage Morgan Stanley believes asset quality trends for Paytm remain strong and unchanged. "Paytm has seen strong asset quality in this segment and is seeing strong demand for the ability to offer these loans. Some of its new lending partnerships in the offing will further enable expansion of this portfolio,” it said.

Brokerage firms such as Bank of America (BofA), JM Financial Services, Jefferies, Motilal Oswal Financial Services, and Dolat remained bullish on Paytm stock with a ‘buy’ rating.

Ajay Srivastava, CEO, Dimensions Corporate Finance Service, said the market has overreacted on Paytm's announcement. Whenever there's any change in government policy, there will be a reaction in the stock market, he added.

Paytm has been seeing a decent demand in high ticket loans with talks with merchant lending partners. The company continues to add banks and NBFCs as its lending partners for its loan distribution business. Paytm’s management, in an analyst call, shared its plan to partner with newer lending partners and bring onboard two more NBFCs and one bank in the coming few quarters. “We will add more lending partners. Three more in the pipeline and will continue to work with them to give them higher quality credit,” the company said.

The company noted that it shares a strong relationship with all seven lending partners. It further added saying that there has been no shutting down of product or capital constraint of any kind.