Following the news that Alibaba and Ant Financial are offloading stakes in the Paytm Mall;

Pinky Hiranandani, Principal Analyst in GlobalData’s Thematic Intelligence team, offers her view:

“Investor confidence in Paytm will decline as Alibaba and Ant Financial offload their stakes in Paytm Mall, citing economic slowdown and growing competition in the Indian market. Paytm wants to become a super app but is impacted by the growing competition and the current investor exits. The likelihood of the company achieving its lofty ambitions is shrinking.

“Paytm has been successful over the past decade due to the growing adoption of digital services in India. It also benefited from the Government of India’s 2016 demonetization initiative, followed by the pandemic in 2020. However, it has come across competition in its core themes such as mobile payment (from Google Pay and PhonePe) and ecommerce (from Amazon, Flipkart, and Reliance).

“Paytm is joining the Open Network Digital Commerce (ONDC), an open platform initiated by the Indian government, to curb the dominance of Amazon and Walmart-owned Flipkart, to focus on exports. But it must match its peers in terms of quality of service, delivery, and stocks to stay competitive in the market.

“Paytm has attempted to diversify its mobile payments service into banking and insurance but has faced troubles from Indian regulators in the recent months. While it wants to establish itself as a super app like Alipay, bigger players such as Tata Group, Reliance Jio, and Amazon will aspire to deter its progress.

“Paytm ranks 10th out of 49 companies in GlobalData’s thematic scorecard for India Tech. However, it lags behind peers like Amazon (which ranks 1st), Alphabet (2nd), and Reliance (6th). Alibaba ranks 8th on the scorecard, and its exit will have a notable impact on Paytm’s growth in the coming years. Paytm must invest in themes such as artificial intelligence, Generation Hashtag, and social media to close the gap with the tech giants.”