In a remarkable turnaround, Paytm, India’s leading fintech giant, made a successful comeback in its stock value, hitting a 52-week high with an astonishing 82% surge in 2023. This dramatic recovery comes after a tumultuous period in 2022 when Paytm’s shares plummeted by almost 70%.
The global slump in tech stocks, a complex regulatory environment for fintech companies in India, increased competition, and the company’s mounting expenses posed a challenge. The expiry of the lock-in period for Paytm’s investors triggered substantial selling. Notably, Softbank, one of the major early backers, reduced its stake, leading to a domino effect of other investors offloading Paytm shares, adding to its woes.
A New Chapter
The turning point came when Paytm reported a decrease in year-on-year losses, starting in Q3 FY23. Furthermore, the growth in Paytm’s lending business played a significant role in boosting its stock price.
Zomato’s announcement of its maiden profitable quarter in Q1 FY24 bolstered the broader sentiment toward new-age tech stocks. This, in turn, contributed to Paytm’s recovery. As a testament to its resurgence, Paytm’s shares hit a new 52-week high in three consecutive days in 2023.
Paytm Stock Performance 2022-23
6 Reasons for the Rise in Paytm Share Price
Paytm’s Founder and CEO, Vijay Shekhar Sharma, highlighted the company’s significant achievements and commitment to sustainable growth.
- Capitalizing on Digital & Credit Payments Opportunity
India’s massive potential for newer payment and credit disbursement solutions allowed Paytm to capitalize on this opportunity, generating revenue and tapping into attractive profit pools. As outlined in its earnings presentation, the company focused on innovation and growth, which helped significantly.
- The Surge in Digital Payments in India
India is experiencing a digital payment revolution, and Paytm believes significant untapped growth potential exists. This includes the growth of the Unified Payments Interface (UPI), card payments, and EMI-led transactions, which are yet to reach the masses. The National Payments Corporation of India (NPCI) has driven UPI adoption, focusing on superior user experience, interoperability, and security.
Paytm established itself as a leading provider of UPI solutions. Moreover, they launched a new feature called UPI LITE. This feature enables users to make instant, small-value UPI payments of ₹200 or less, enhancing the user experience and simplifying bank statements.
- Introduction of RuPay Credit Card on UPI
Paytm made it even more convenient for customers and merchants to make payments by introducing the RuPay Credit Card on UPI. This new feature lets customers enjoy the benefits of using credit cards, while merchants benefit from the increased business by accepting credit cards using assets such as QR Codes.
- Massive Growth Potential
Paytm has set its sights on a future where India could potentially have 100 million merchant entities and over 500 million payment customers. The payment and other services subscriptions market is expected to grow substantially, further boosting Paytm’s growth prospects.
- Foray Into The Lending Sector
Paytm aims to expand its presence in the lending sector by partnering with major Non-Banking Financial Companies (NBFCs) and banks to fully leverage the potential of small digital credit on the Paytm platform. In Q3 FY 2023, the value of loans disbursed by Paytm’s financial institution partners through its platform surged to ₹9,958 crore, an impressive growth of 357% year-on-year and 36% quarter-on-quarter.
- Committed to RBI Compliance and Operational Excellence
Paytm is committed to working closely with the Reserve Bank of India (RBI), focusing on Paytm Payments Bank Ltd and Paytm Payments Services Ltd. The company will prioritize operational risk management and compliance for sustained success.
Paytm faces increased competition with the entry of Jio Financial Services. Moreover, the RBI imposed a fine for violating KYC norms. The company could benefit from the growing adoption of digital payments in India, considering the subscription numbers for payment devices and payment volume on its platform are consistently rising.
Despite ongoing competition and regulatory challenges, Paytm’s stock performance reflects its determination and adaptability in the ever-evolving world of finance. Whether Paytm is successful in achieving its goal is yet to be seen.
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I’m Archana R. Chettiar, an experienced content creator with
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