The Paytm stock on Tuesday plunged more than 11% to a record low of Rs 474.30 after analysts at Macquarie highlighted risks to its business from the entry of Reliance Industries (RIL) into the financial services space.

RIL said recently it plans to build a financial services business called Jio Financial Services (JFS) and leverage its fast-growing retail business. The entity will eventually list on the bourses.

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The scale of RIL’s retail operations and its deep pockets could mean stiff competition for Paytm, which is struggling to become profitable. The stock is down nearly 78% from its IPO price of Rs 2,150 and has lost 27% in the last two weeks.

Ganapathy wrote JFS would have an edge over other fintechs in that it would have access to huge amounts of data, gathered from non-financial relationships. This data, he believes, can be processed and analysed in real time, enabling the company to offer financial services, similar to those from Alibaba, Amazon, Apple, Facebook and Google.

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Ganapathy pointed out that unlike other fintechs, JFS will have a large balance sheet, not be asset-light and eventually manufacture most product offerings, giving it a significant competitive advantage. Analysts at JP Morgan wrote after Paytm’s Q2FY23 results that the fintech firm was expected to report strong revenue growth across all its business segments thanks to device monetisation in payments, financial services cross-selling, ticketing recovery and rising ad monetisation. They see revenues growing at a compounded annual growth rate of more than 44% over FY22-26 to around $2.7billion. “We see Paytm retaining the highest revenue and profit levels among local vertical and global horizontal peers,” they said.