In a concerning trend, Paytm’s stock has witnessed a significant downturn, plummeting by another 10 percent on February 5. This marks the third consecutive session of a lower circuit, with the overall fall extending to a staggering 42 percent. The stock has tumbled from Rs 761.4 to Rs 438.5 as of Monday morning.
The woes for Paytm escalated after the Reserve Bank of India (RBI) imposed stringent restrictions on its payments bank unit last week. These measures include a ban on accepting new deposits and conducting credit transactions beyond February 29. Such regulatory actions have prompted brokerages to revise their ratings and target prices for Paytm stock. Jefferies reduced the target price to Rs 500, while Macquarie adjusted it to Rs 650. The
Over the weekend, Paytm found itself in crisis management mode, attempting to mitigate the fallout from a slew of negative news. Amidst speculations of an investigation by the Enforcement Directorate (ED) for potential money laundering activities, the company vehemently denied any such probe in a regulatory filing.
Despite the denial, reports surfaced suggesting that the RBI might contemplate revoking Paytm’s banking license as early as next month, ensuring the safety of depositors’ funds. The banking regulator had previously curtailed most of the firm’s banking operations following repeated warnings over the past two years regarding transactions between its payments app and banking unit.
Analysts at Jefferies, on February 2, had already signaled a bearish outlook for Paytm by giving it an underperform rating with a target price of Rs 500 per share. The accompanying report expressed concerns that recent events would impede the company’s growth and extend the timeline for achieving profitability.
As the Paytm saga unfolds, investors and industry watchers are closely monitoring the developments, with the fintech giant navigating through a challenging period of regulatory scrutiny and market turbulence.
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