One97 Communications, the parent company of the popular fintech brand Paytm, has achieved a significant milestone by being included in the MSCI Emerging Markets Small Cap Index. This inclusion is indicative of growing confidence among both domestic and international investors in Paytm, evidenced by substantial stake increases from foreign portfolio investors (FPIs), domestic investors, and prominent Mutual Funds such as Mirae and Nippon India Mutual Fund.
With Paytm being one of the 29 stocks included in the MSCI Small Cap Index, the move is expected to drive USD 273 million in inflows, which is crucial for benchmarking Indian companies on the international stage. The inclusion comes as part of MSCI’s routine review, aligning with evolving market conditions, scheduled for May 31, 2024. MSCI, a global leader in equity, fixed-income, and hedge fund indices, plays a pivotal role in shaping global investment trends.
During the March quarter of 2023-24, Indian mutual funds notably increased their holdings in Paytm. Mirae Mutual Funds elevated their shareholding to 2.39 crore shares (3.76 per cent), while Nippon Mutual Funds raised their stake to 1.66 per cent from 1.05 per cent over the same period. Consequently, domestic institutional investors (DIIs) witnessed an increase in stake to 6.86 per cent from 6.06 per cent.
The shareholding pattern available with the stock exchanges indicates that domestic mutual funds boosted 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 of the fiscal year. Retail investors also saw an uptick in shareholding, rising from 12.85 per cent to 14.53 per cent sequentially, while Non-Resident Indians (NRIs) witnessed an increase from 0.67 per cent to 0.85 per cent.
Simultaneously, FPI shareholding in Paytm surged by 2.49 per cent to 20.19 per cent in Q4-2023-24, with new investors including Tiger Pacific Capital, Societe Generale, and Norway’s Government Pension Fund Global investing in the stock. Notably, in February this year, Morgan Stanley Asia (Singapore) Pte. – ODI acquired 50 lakh shares of Paytm worth Rs 243.6 crore in a bulk deal, as confirmed by the company.
Abhilash Pagaria, head of Nuvama Alternative and Quantitative Research, expressed bullish sentiments on India’s equity markets, attributing it to active participation from mutual funds and High Net Worth Individuals (HNIs)/retailers. Paytm currently boasts 60.4 per cent holdings by 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 has expedited integration with Axis Bank, HDFC Bank, State Bank of India (SBI), and YES Bank. All four banks are now operational on the TPAP, facilitating a streamlined process for Paytm to transition user accounts to these Payment Service Provider (PSP) banks.
Moreover, Paytm is directing its focus towards UPI Lite wallet, targeting users preferring wallets for low-value everyday payments. Paytm UPI Lite serves as an on-device wallet, allowing users to store funds and make hassle-free payments without requiring a PIN. It promises lightning-fast transactions that never fail, offering convenience and efficiency to users on the go.