Edited by Deepali Verma
Paytm stock registered an added fall of 10 percent, again hitting the lower circuit on February 5, registering a total fall to over 42 percent in the previous three sessions. Paytm stock has hit back-to-back lower circuits after the RBI curbs on its payments bank unit, and has fallen from Rs 761.4 to Rs 438.5 as of today’s morning.
During the beginning of the last week, the Reserve Bank of India imposed sweeping curbs on One97 Communications’ payments bank business, such as restrictions against accepting fresh deposits and carrying out credit transactions post February 29. Brokerages were responsible for sharply cutting Paytm stock ratings and target prices where Jefferies cut the target price to Rs 500 and Macquarie cut it to Rs 650.
Paytm, over the course of the weekend, was engaged in a crisis management mode, trying to contain the fallout and limit the negative news flowing in. Publicly, the company has denied facing any investigation from the Enforcement Directorate (ED), after reports that a probe is likely to be initiated if charges related to money laundering are found.
The company “categorically denies any investigation by the Enforcement Directorate on OCL (One97 Communications Ltd), our associates and/or its Founder and CEO for anti-money laundering activities”, as per the remarks of the fintech major.
News reports further suggest that the Reserve Bank of India may consider cancelling Paytm’s banking licence, sometime as early as the next month, once the depositors money is safe. The banking regulator put a pause to most of the firm’s banking business after multiple warnings over the past two years on dealings between its payments app and banking unit. On February 2, Jefferies analysts had given the stock an underperform call having a target price of Rs 500 per share. “We believe recent events will drag the company’s growth and elongate profitability timelines,” added the report.
