Paytm Stock Price: Shares of One 97 Communications, parent of Paytm, have given away two-thirds of their value from the initial public offering price of Rs 2,150. On March 14, shares nosedived another 13 per cent to Rs 675 on the National Stock Exchange. The scrip had settled at Rs 774.80 on Friday.
This comes after, the Reserve Bank of India has barred Paytm Payments Bank on Saturday, from onboarding new customers until a comprehensive audit of its information technology system is done.
Onboarding of new customers by Paytm Payments Bank Ltd will be subject to specific permission to be granted by the central bank after reviewing the report of the information technology auditors, it added. Paytm Payments Bank is 51 per cent owned by Sharma, while One97 Communications holds the rest.
Later, Paytm Payments Bank in a tweet said it’s taking all the steps to comply with the RBI orders. “Dear customers, we value your relationship with us. We are taking all steps to comply with the RBI directions. Our existing customers can continue to seamlessly use all our banking services.”
Paytm Payments Bank started operations in 2017 to help Paytm customers without access to the formal banking sector open bank accounts after getting their licence in 2015. In December, it received RBI’s approval to function as a scheduled payments bank.
The company had shown 98 per cent year-on-year growth in revenues of payments and financial services vertical in the quarter ended December. Payments services to consumers saw a 60 per cent jump in revenues while payments services to merchants grew by 117 per cent driven by MDR-instruments. The lending operations of the company had also seen significant growth in the December quarter with loan disbursed rising 401 per cent on year.
In another recent development, Vijay Shekhar Sharma, founder and CEO of Paytm, was arrested and later released on bail for ramming his car into the vehicle of DCP South in the month of February.
On Monday, Paytm shares hit an all-time low. The company had raised $2.5 billion in its IPO, but a 27 per cent plunge in its November 18, 2021 debut made it one of the worst initial showings by a major technology firm since the dot-com bubble era of the late 1990s. The stock has declined more than 49 per cent in 2022 (year-to-date or YTD) so far, whereas it is down about 56 per cent since listing.
Paytm Shares: Should you Buy, Sell or Hold?
Compared to its IPO valuation of Rs 1.5 lakh crore, the stock’s valuation has now slipped below Rs 44,000. Paytm Payments Bank was eyeing to apply for a small finance bank licence.
Brokerage firm Macquarie has maintained a target price of Rs 700 with an ‘underperform’ rating on Paytm. Meanwhile, brokerage firm Morgan Stanley downgraded its call on the fintech services company to ‘equal-weight’ from ‘overweight’ as RBI action could increase regulatory uncertainty for the company. The brokerage firm has slashed its price target for the stock to Rs 935 from Rs 1,425.
Commenting on if investors should hold the Paytm stock, Ravi Singhal, vice chairman at GCL Securities, said: “If you have patience and a long-term view of more than 5 years, you can invest up to 7 per cent of your risk capital.”
Ravi Singh, Head of Research and Vice President, Share India, said: “The stock may see more selling pressure and may touch the level of 500 in the medium term.”
Divam Sharma, founder at Green Portfolio, said: “New investors should stay away from the stock till we get further clarity on the ban. The stock price is still not settled and we are continuing to see a correction in tech stocks globally. The growth in the business will be the key for the company to attract investors going forward and this event will have an impact on the incremental revenues. Considering the possibility around rise in interest rates and inflation, investors will be inclined towards value stocks going forward.”
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