SUMMARY
Paytm shares declined 5% on Thursday to touch 52 week-low at INR 325.30 apiece at opening
This comes soon after RBI reportedly asked the ED to check for suspected breaches at the fintech major’s banking unit Paytm Payments Bank
Due to the ongoing issue, brokerage Macquarie recently lowered its price target (PT) to INR 275 from INR 650
Shares of One 97 Communications, the parent company of fintech major Paytm, continued to hit a new low for the third consecutive day on Thursday (February 15).
Paytm’s shares declined 5% on Thursday to touch 52 week-low at INR 325.30 apiece at the opening. The shares were trading at INR 328.5 apiece at 11:00 am on BSE on Thursday.
This comes soon after, the Reserve Bank of India (RBI) reportedly asked the Directorate of Enforcement (ED) to check for suspected breaches at the fintech major’s banking unit Paytm Payments Bank.
Responding to reports of the ED registering a case of forex violations against Paytm Payments Bank, Paytm on Wednesday said its banking unit does not undertake outward foreign remittances.
“We would also like to clarify that our associate Paytm Payments Bank Limited does not undertake Outward Foreign Remittance,” the company said in an exchange filing.
Over the past one month, Paytm stocks have dropped nearly 55% amid the regulatory crisis.
The RBI on January 31 barred Paytm Payments Bank from taking deposits, credits, or processing top-up transactions in its customer accounts for ‘persistent non-compliances’. The bank has also been barred from processing other banking services like UPI facilities and funds transfers from February 29.
Meanwhile, the central bank’s governor Shaktikanta Das on Monday said there is “hardly any room” to review the action on the payments bank.
Due to the ongoing issue, brokerage Macquarie recently downgraded One97 Communications to ‘underperform’ from an earlier ‘neutral’ rating and lowered its price target (PT) to INR 275 from INR 650. The brokerage’s current target implies a downside of 27.7% to the stock’s last close.
Macquarie also increased loss estimates on Paytm by 170% and 40% over FY25 and FY26, respectively, factoring in a 60-65% decline in revenue due to lower payments and the company’s distribution revenue.
Following a substantial downturn in 2022, Paytm shares surged in 2023, experiencing an 80% increase by October, surpassing the INR 980 mark. However, due to restructuring within its lending division, the shares concluded 2023 at around INR 630.
Currently, Paytm shares are trading 48% lower year to date.
