Paytm hits 5% upper limit after registering new low; stock down 58% in Feb

Till 01:42 pm; a combined 20.95 million shares changed hands and there were pending buy orders for a combined 1.34 million shares on the NSE and BSE.

Shares of One97 Communications, which provides financial services under the Paytm brand and its banking arm Paytm Payments Bank, were locked in the 5 per cent upper circuit at Rs 341.50 on the BSE on Friday at 01:42 pm. The stock had recovered 7 per cent from the day’s low.  A combined 20.95 million shares changed hands, and there were pending buy orders for a combined 1.34 million shares on the NSE and BSE.

The market price of fintech company hit a record low of Rs 318.35 in intra-day trade today. So far this month the stock has tanked 58 per cent after the Reserve Bank of India (RBI) ordered Paytm Payments Bank to stop most of its businesses, including deposits, by February 29.

According to data analysed by Business Standard, the curbs on Paytm Payments Bank may have limited impact as around 90 per cent of Paytm UPI app users have their accounts linked with other banks. CLICK HERE FOR FULL STORY

Meanwhile, in an exchange filing, the company said it has been receiving notices and requests for information, documents and explanations from the Authorities, including Enforcement Directorate (ED), with respect to the customers that may have done business with the respective entities, and provided the required information, documents and explanations to the Authorities.

The company and its associate have continued to provide such information, documents and explanations to the Authorities as is being required by them, it added. The company further clarified that its associate Paytm Payments Bank Limited does not undertake Outward Foreign Remittance.

Macquarie, earlier this week, sharply cut target price of Patym to Rs 275 from Rs 650, driven by a reduction in revenues across various segments.

“Post the recent regulatory changes and diktats, Paytm now faces a serious risk of exodus of customers (overall 330 million customers and 110 million MTUs – monthly transacting users and merchant subscription network of 10.6 million) which significantly jeopardises its monetisation as well as its business model,” the brokerage said in its note.

“Moving payment bank customers to other bank accounts or moving related merchant accounts to other bank accounts will require KYC (Know your customer) to be done again based on our channel checks with partners, indicating that migration within RBI's February 29th deadline will be an arduous task,” the brokerage firm said.

Macquarie further stated their channel checks with some lending partners reveal that they are re-looking at their relationship with Paytm which eventually could lead to a decline in lending business revenues in case partners scale down or terminate their relationship with Paytm.

However, other analysts believe that the company should accelerate the transfer of merchant accounts from Paytm Payments Bank to third party banks with the February 29 deadline. At least this will allow it to maintain the trust among these merchants even as they move to other banks. Paytm has over 20 million merchants on its platform.