Paytm Stocks Hit Lifetime Low: Shares of One97 Communications, the parent company of digital payments major Paytm, hit fresh lifetime lows in Tuesday’s trade as investors continued to remain bearish on the counter. It hit a new low at Rs 550.50, down 3 per cent on the BSE in Tuesday’s intra-day trade on the back of the heavy volume.
As per its new low, shares of Paytm have eroded about 75 per cent of investors’ wealth from its issue price of Rs 2,150. The company got listed on the bourses in November 2021. In the past month, the stock has tanked 32 per cent owing to persistent negative news flow. In comparison, the S&P BSE Sensex was down marginally by 0.21 per cent during the same period. The stock hit a record high of Rs 1,961.05 on November 18, 2021, in intra-day trade, but failed to touch its issue price post listing.
Since its listing, the company has wiped out more than Rs 1.03 lakh crore in market capitalization. At the time of writing this copy, the company’s market cap barely held above Rs 35,500 crore as against Rs 1.38 lakh crore at the time of its IPO.
All is Not Well at Paytm
The Reserve Bank of India (RBI) on Friday, March 11, 2022, barred Paytm Payments Bank (PPBL) from onboarding new customers with immediate effect because of certain supervisory concerns. PPBL processes transactions for India’s digital payments giant Paytm.
The banking regulator has directed PPBL to appoint an IT audit firm for conducting a comprehensive system audit of its IT system. Paytm PB will need specific permission from the RBI to restart the onboarding of customers following a review of the audit. Paytm has said that PPBL, was taking immediate steps to comply with RBI directions and was looking to appoint a reputed external auditor to conduct a comprehensive systems audit of its IT systems.
However, the company stated that the RBI order does not impact any existing customers of PPBL, who can continue to use all banking and payment services without interruption.
Paytm Shares: What do Brokerages Say?
Global financial major Macquarie slashed its price target for Paytm citing regulatory headwinds including a falling probability of getting a banking licence. This is the second time that the global brokerage firm has slashed its target for Paytm. It initiated coverage on the stock in November last year with a target price of Rs 1,200, which was cut to Rs 700 last month and now has been further slashed to Rs 450 per share.
“Recent developments significantly reduce the probability of getting a banking license to lend, in our view,” stated the Macquarie report while highlighting the recent Reserve Bank of India (RBI) action against the fintech firm’s subsidiary, Paytm Payments Bank and the problem of Chinese ownership, which is in excess of 25 per cent.
“RBI’s regulations on digital payments and BNPL (Buy Now Pay Later), and stricter KYC and compliance norms will all be adverse developments for fintech companies in general, potentially bringing down unit economics and/or growth, in our view. We see these as additional headwinds for Paytm, which could cloud its path towards profitability,” the report added.
“Paytm stock is in a continuous downtrend on negative sentiments and may touch the levels of 500 – 450 in the near term. Investors must avoid this stock for time being,” said Dr. Ravi Singh-vice president at ShareIndia.
“The price is currently at Rs 556 and we can expect further fall in prices as there is no support, it might fall till Rs 425 levels which might be scary for investors. Buying is suggested after some price reversals with a proper base formation and crossing above Rs 800 levels. Fundamentally a good quarterly result along with a with proper business guidance might drive up the prices which might be a good time to buy,” explained Manoj Dalmia at Proficient Equities Limited.
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