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Macquarie says no signs of headwinds abating at Paytm

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Paytm. (Photo: Twitter/@Paytm)

 Foreign brokerage Macquarie said on Monday there is no signs of headwinds abating at Paytm as it slashed the target price to Rs 900.

One 97 Communications or Paytm stock was down almost 5.95 per cent on Monday at Rs 1,158.

Since November 18, 2021, Paytm’s stock price has fallen 40 per cent vs Sensex’s flat performance, Macquarie said.

Post the various business updates and results, Macquarie said revenue projections, particularly on the distribution side, is at risk and hence we pare down our revenue CAGR from 26 per cent to 2 per cent for FY21-26E.

“We are roughly cutting revenue estimates for FY21-26E on an average by 10 per cent every year due to lower distribution and commerce/cloud revenues offset partially by higher payment revenues. We cut our earnings (increase our loss projections) by 16-27 per cent for FY22-25E owing to lower revenues and higher employee and software expenses. We cut our TP sharply by 25 per cent owing to lower target multiple of 11.5x (Price to Sales ratio) (from 13.5x earlier) and lower sales numbers.”

Macquarie laid out several challenges which exist for Paytm from regulatory to business specific.

“‘The elephant in the room’- RBI’s proposed digital payments regulations could cap wallet charges. Payments business still forms 70 per cent of overall gross revenues for Paytm and hence any regulations capping charges could impact revenues significantly. Add to that, Paytm’s foray into insurance was recently rejected by the insurance regulator IRDA. We believe this could impact Paytm’s prospects of getting a banking license,” it added.

Senior management attrition is another cause of concern, it said. Senior executives have been resigning from Paytm which is a cause of concern and could impact business in our view if the current rate of attrition continues.

“Can it do lot of merchant loans? We aren’t sure,” Macquarie said.

“In the past 12 months, Paytm’s average ticket size for loans disbursed by it has been consistently coming down and stands at sub Rs 5,000 levels. At this size, we don’t think it is doing many merchant loans and most of the loans are small value BNPL loans. Hence the eventual distribution fees realised by them are likely to be much lower than our earlier estimates.

“We cut our revenue projections for FY22-26E and hence our CAGR reduces from 26 per cent to 23 per cent. The main reason is that we have pared down our commerce and particularly distribution business revenues.

“Competition will limit commerce revenue growth and distribution business will continue to be led by small ticket BNPL loans there by limiting revenue potential in our view.

“We cut our earnings projections or increase losses for FY22-26E driven by lower revenues and higher employee and software and cloud expenses. There is competition for tech talent, and we see pressure on employee expenses to remain. Key risks to our UP call are a change in regulations which allow monetisation of UPI and receipt of a banking license,” Macquarie added.

Business

After Meta, Google to report child sexual abuse content directly to Indian authorities

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New Delhi, Sep 22: After Meta, US tech giant Google will report content flagged as child sexual abuse material (CSAM) directly to the Indian authorities, contrary to the long‑standing global practice of routing such reports through a US non‑profit organisation.

Meta announced a similar change last week after Indian officials pressed major tech firms in recent weeks to speed up reporting, citing concerns that the existing system delays reports considerably.

Google “invests significantly to detect, deter, remove, and report child sexual abuse material,” a company spokesperson said, describing the change as part of the company’s “ongoing discussions with the government of India.”

Meta and Alphabet’s Google used to send tips to the US‑based National Center for Missing & Exploited Children (NCMEC) which then relayed them to local law enforcement, according to reports.

Such a practice could cause dangerous delays in cases where children may be at immediate risk as reports pass through an intermediary before reaching domestic police who can act on the ground.

The US nonprofit that erstwhile used to receive such reports first hand runs CyberTipline portal that recorded nearly 21.3 million reports from around the world of suspected child sexual exploitation in 2025.

India remains the largest market by user count for both Meta’s Facebook and Google’s YouTube. Meta’s shift in policy comes after weeks of friction with New Delhi, including an apology last month by CEO Mark Zuckerberg over the spread of child sexual abuse material on the company’s platforms.

Technology and law enforcement officials in the United States, the European Union and elsewhere have urged platforms to bolster detection and reporting. However, most countries continue to route reports through the US nonprofit as the primary international clearing house.

The Central government, in July, directed Google to take down multiple Firebase web development accounts that were impersonating the websites and mobile apps of major public- and private-sector banks and other financial institutions.

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Business

Sensex, Nifty open marginally higher over crude price correction

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Mumbai, Sep 22: The Indian equity markets inched up slightly on Tuesday morning, tracking positive global cues and correction in global crude prices.

As of 9.20 am, Sensex added 64 points, or 0.10 per cent, to reach 74,914 and Nifty gained 34 points, or 0.15 per cent, to reach 23,449.

Main broad-cap indices outperformed gains of the benchmark indices, as the Nifty Midcap 100 added 0.33 per cent, and the Nifty Smallcap 100 advanced 0.4 per cent.

Sectoral indices on NSE traded in green except Nifty IT down 1.09 per cent and FMCG down 0.01 per cent. Nifty realty was the top gainer, up 1 per cent, followed by chemicals, up 0.64 per cent.

“With precious metals stabilising and fixed income returns becoming attractive, investors can now opt for a multi-asset strategy,” an analyst said.

WTI crude trading in the $92–$93-a-barrel range and a stronger rupee provided additional comfort on the broader macroeconomic front.

Global risk sentiment has improved, with US equities posting strong gains and Asian markets largely positive, while softer crude prices have eased some pressure on oil-importing economies.

In the previous session, Nifty surged 0.29 per cent and closed at 23,414. Immediate support is placed at 23,250–23,300, while resistance is seen at 23,550–23,600.

In the previous session, Bank Nifty closed at 56,470, up 0.20 per cent. Immediate support is placed at 56,000–56,300, while resistance is seen at 56,800–57,000, said analysts.

In Asian markets, China’s Shanghai index gained 0.22 per cent, and Shenzhen added 0.62 per cent, Japan’s Nikkei added 1.38 per cent, and Hong Kong’s Hang Seng Index added 0.41 per cent. South Korea’s Kospi added 1.89 per cent.

The US markets ended in green overnight as Nasdaq gained 2.26 per cent. The S&P 500 added 1.49 per cent, and the Dow Jones added 0.71 per cent.

On September 21, foreign institutional investors (FIIs) net sold equities worth Rs 576 crore, while domestic institutional investors (DIIs) bought equities worth Rs 2,800 crore.

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Business

FM Sitharaman meets JPMorgan CEO Jamie Dimon in Mumbai

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Mumbai, Sep 21: Finance Minister Nirmala Sitharaman on Monday met Jamie Dimon, Chairman and Chief Executive Officer of JPMorgan Chase & Co., during the 11th edition of the JPMorgan India Investor Conference in Mumbai.

According to the Finance Ministry, Dimon interacted with the finance minister on the sidelines of the conference, which brought together investors, policymakers and corporate leaders to discuss India’s economic outlook and investment opportunities.

FM Sitharaman also addressed participants at the event and took part in a fireside chat with Sajjid Chinoy, Head of Asia Economics at JPMorgan.

“Jamie Dimon, Chairman and CEO of JPMorgan Chase & Co., interacts with FM Sitharaman during the J.P. Morgan India Investor Conference in Mumbai, Maharashtra,” the finance minister posted on social media platform X.

” FM Sitharaman addressed the gathering and participated in a fireside chat with Sajjid Chinoy, Head of Asia Economics at JPMorgan, during the 11th edition of the J.P. Morgan India Investor Conference in Mumbai, Maharashtra,” the finance minister added.

The meeting comes as JPMorgan said in a recent report that a combination of tax reforms and regulatory measures had enhanced the attractiveness of equities for domestic investors, helping sustain robust inflows despite relatively muted market returns over the past two years.

The brokerage noted that changes in the taxation framework for long-term capital gains, debt mutual funds and certain insurance products have improved the relative appeal of equities.

It said these measures, alongside rising participation through systematic investment plans (SIPs), are supporting a continued shift of household savings toward financial assets.

According to JPMorgan, domestic investors have increasingly emerged as a stabilising force for Indian markets, offsetting bouts of volatility triggered by foreign portfolio investor outflows and global uncertainties.

The report highlighted that retail participation has remained resilient even during periods of modest benchmark returns, signalling a structural change in investment behaviour.

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