Paytm’s stock plunged over 11% to the lowest point on Tuesday after a report from Macquarie sounded out a potential risk for the Noida-based payments firm from billionaire Mukesh Ambani’s Jio Financial Services.
Shares of One97 Communications, the parent of Paytm, slipped to Rs 475.55 on the National Stock Exchange (NSE).
“Entity could be the 5th largest financial services company in India in terms of net-worth,” Macquarie analysts said, adding that amongst fintechs, Paytm could be “most at risk.”
Last month, Ambani’s Reliance Industries Ltd said it will demerge its financial services business and list it separately on the stock exchanges under Jio Financial Services Ltd to tap the growing demand for new age financial services for retail and small-business customers.
“JFS will be a technology-led business, delivering financial products digitally by leveraging the nation-wide omni-channel presence of Reliance’s consumer businesses,” Ambani had said in a statement.
In the report, Macquarie said with its access to huge amounts of data, gathered from a non-financial relationship, Jio Financial Services will be able to differentiate from other fintechs. It will be able to process and analyze the data in real-time, and offer financial services similar to larger corporations such as Alibaba, Amazon, Apple, Facebook, Google.
With RIL’s large balance sheet, NBFC license and network, Jio Financial Services has good resources to leverage. It is being led by banking veteran K V Kamath.
“RIL can significantly disrupt the payments business and be a real threat to Fintech business models,” the report said.
“JFS growth pursuits are likely to be aggressive. Kamath has a legacy of spotting newer markets and opportunities going by his past track record and can scale up JFS business verticals.”
Paytm’s stock has lost about 22% since last Wednesday after its expiry of the lock-in period allowed for a sell-off. The company’s stock has fallen more than 75% from its listing price of Rs 1950 on the NSE, when it debuted on the stock exchange last year in November.