One97 Communications, the company behind the widely-used fintech platform Paytm, has been added to the MSCI Emerging Markets Small Cap Index. This move signifies growing confidence among both domestic and international investors in Paytm, evident from substantial stake increases by foreign portfolio investors (FPIs), domestic investors, and major Mutual Funds like Mirae and Nippon India Mutual Fund.
Being one of the 29 stocks included in the MSCI Small Cap Index, Paytm’s addition is expected to attract USD 273 million in inflows, which is crucial for the international benchmarking of Indian companies. This decision is part of MSCI’s regular review process, which adjusts to changing market dynamics and is scheduled for May 31, 2024. MSCI, known as Morgan Stanley Capital International, is a global authority in equity, fixed-income, and hedge fund indices.
During the March quarter of 2023-24, Indian mutual funds increased their holdings in Paytm. Notably, Mirae Mutual Funds raised their shareholding to 2.39 crore shares (3.76 per cent), while Nippon Mutual Funds increased their stake to 1.66 per cent from 1.05 per cent. Consequently, domestic institutional investors (DIIs) saw a rise in stake from 6.06 per cent to 6.86 per cent.
According to data from stock exchanges, domestic mutual funds augmented their stake in Paytm by 1.77 per cent, reaching 6.15 per cent from 4.99 per cent at the end of the December quarter.
Retail investors’ shareholding also witnessed an increase from 12.85 per cent to 14.53 per cent sequentially, while Non-Resident Indians (NRIs) observed a rise from 0.67 per cent to 0.85 per cent. In addition, FPI shareholding in Paytm increased by 2.49 per cent to 20.19 per cent in Q4-2023-24, with new investors like Tiger Pacific Capital, Societe Generale, and Norway’s Government Pension Fund Global investing in the stock.
In February of the current year, Morgan Stanley Asia (Singapore) Pte. – ODI acquired 50 lakh shares of Paytm worth Rs 243.6 crore in a bulk deal.
Abhilash Pagaria, head of Nuvama Alternative and Quantitative Research, expresses strong optimism about India, especially with active participation from mutual funds and High Net Worth Individuals (HNIs)/retailers in the Indian equity markets. Paytm holds 60.4 per cent of its holdings by Foreign Institutional Investors (FIIs) as of the March quarter of 2023-24.
Following NPCI’s approval on March 14, 2024, to onboard OCL as a Third-Party Application Provider (TPAP) on the Multi Payment Service Provider API Model, Paytm expedited the integration with Axis Bank, HDFC Bank, State Bank of India (SBI), and YES Bank. All four banks are now operational on the TPAP, simplifying the process for Paytm to migrate user accounts to these Payment Service Provider (PSP) banks.
Furthermore, Paytm is currently concentrating on its UPI Lite wallet to cater to users preferring wallets for low-value everyday payments. Paytm UPI Lite functions as an on-device wallet, allowing users to store funds and conduct transactions conveniently on the go. It provides swift payments without requiring a PIN, ensuring seamless transactions.