The sale of One 97 Communications (Paytm) shares, which has been ongoing since the middle of October, has recently picked up steam as a result of Paytm's decision to reduce its small-ticket loans. Macquarie, which has a neutral rating on the company, stated that Paytm's decision to rebalance its loan portfolio was a precautionary measure taken in collaboration with the partners. The overseas brokerage stated in a flash note that there was no deterioration in asset quality in the post-paid or personal loan segments. Macquarie has set a share price objective of Rs 900 for Paytm, implying a 46% potential upside over Monday's intraday price of Rs 617.45.

"In the case of post-paid loans, management indicated that it is a risk-averse decision based on stress observed in certain pockets of the system." While the CoF for NBFC partners will increase due to greater risk weights for bank lending to NBFCs, the impact on products such as post-paid loans will be insignificant due to the short tenor (up to 30 days)," Paytm stated.

The management indicated that increasing scale in large-ticket personal loans is feasible because certain customers were previously eligible for higher ticket-size loans, but with Paytm's lending model limited to ticket sizes up to Rs 3 lakh, the said customers would seek loans from other lenders, according to Macquarie.

"Furthermore, customers who have primary deposit relationships with other banks use Paytm to obtain personal loans." Paytm sees this as a potential in the high-ticket (Rs 3-7 lakh) personal loan sector," according to the brokerage.

Given the service proposition, management expects merchants and customers to remain loyal despite fintechs joining the payments and lending area. According to Macquarie, Paytm is seeking sustained upselling to its high-quality consumers in the lending segment, where it has a data edge.

Paytm's stock was up 1.91 percent on Monday. On October 20, the stock reached a 52-week high of Rs 998.30. According to Macquarie, higher-than-expected losses in the medium term pose a negative risk to the Paytm stock, while structural momentum in the financial services business over several years poses an upside risk.