CLSA has said that India’s payments sector, once seen as a high-growth story, is now slowing, with both UPI merchant transactions and credit card spends moderating from earlier peaks.
The brokerage highlighted that person-to-merchant (P2M) payments grew at over 35% CAGR between FY20 and FY24, driven by UPI adoption and rising credit card usage. However, UPI P2M growth has now slowed to 20–25% from 50% year-on-year earlier, while credit card spend growth has moderated to around 15% from 25%.
With payments penetration already reaching around 40% of India’s consumption GDP, CLSA believes the sector is entering a phase of moderation. As a result, valuation multiples are likely to adjust lower in line with slower growth.
The brokerage reiterated its underperform rating on Paytm with a target price of ₹920 and on SBI Card with a target price of ₹800, saying both companies face challenges as the industry shifts to a lower growth trajectory.
Disclaimer: The views and recommendations made in this article are those of CLSA. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
