Bernstein has maintained its ‘Outperform’ rating on One97 Communications (Paytm) with a target price of Rs 1100. The brokerage has expressed concerns over the company’s recent strategic move. Paytm announced the acquisition of a 25% minority stake in a Brazil-based embedded finance startup for US$1 million. Bernstein views this expansion as a negative development, arguing that Paytm is yet to achieve profitability in its home market, which still demands undivided management focus due to its competitive landscape.
The brokerage notes that while the sum involved is relatively small, the move signals a shift in focus that could distract Paytm from solidifying its position in India. This concern was echoed after the company’s earnings call, where it first indicated its ambitions for foreign opportunities, leading to an 18% correction in Paytm’s stock. Bernstein warns that chasing new international markets could undermine investor confidence in Paytm’s ability to concentrate on the large, yet challenging, Indian fintech space. However, it also acknowledges that the modest investment figure might come as a relief to some investors.
