Shares of Paytm traded lower on Thursday, following a an increase in losses for the March quarter.

What Happened: The fintech giant reported a consolidated net loss of ₹549.60 crore for the quarter ending March 31, a significant rise from a loss of ₹168.90 crore during the same period last year. This deepening loss comes as Paytm grapples with regulatory challenges impacting its banking division.

The company’s revenue from operations also saw a decline, dropping 3% year-on-year to ₹2,267.10 crore from ₹2,334.50 crore. The company anticipates an annualized direct EBITDA impact of ₹500 crore from these issues, with most effects expected in the first quarter of FY2025.

What do analysts have to say? Jefferies shifted its rating to hold from underperform, although it reduced its target price to ₹400 from ₹500. The firm highlights that Paytm’s revenue declined 20% quarter-over-quarter and predicts a further 30% drop in the first quarter of FY2025 as the full impact of regulatory actions becomes apparent. However, Jefferies anticipates a recovery in payments and commerce revenues with increased marketing expenditures and a gradual scale-up in lending.

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In contrast, Macquarie continues to rate Paytm as “underperform” with a target price of ₹275, emphasizing the tough quarters ahead due to the full impact of RBI regulations. Meanwhile, Bernstein, more optimistic, rates Paytm as ‘Outperform’ with a target price of ₹600, citing potential signs of recovery in payment volumes and merchant engagement.

Other firms like Morgan Stanley and Citi have maintained their ratings but adjusted target prices and expectations based on Paytm’s guidance and market conditions. Morgan Stanley holds an equal-weight rating with a target of ₹555, whereas Citi has lowered its target slightly to ₹360 from ₹365, expecting a significant drop in payments and GMV in the upcoming quarters.

Emkay Global also maintained its “reduce” rating for the stock with a price target of ₹300. The brokerage said that it expects the fintech giant to witness significant business disruption in FY25, and recuperation to begin gradually thereafter, subject to no further business/regulatory hurdles.

Motilal Oswal has taken a neutral stance on Paytm, reducing its target price to ₹400 from ₹475. The brokerage noted a softening in business metrics and anticipates the first quarter of FY25 to mark the bottom. Motilal Oswal has also adjusted its EBITDA estimates downward for the next two fiscal years due to these challenges.

Price Action: Paytm’s parent company shares were trading 2.49% lower at ₹359.65 on Thursday morning.

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