Paytm stock tanks 20% for second straight day

MUMBAI: The street failed to take comfort from Paytm management’s assurance to investors that the company would disassociate from Paytm Payments Bank (PPBL) and partner with other banks following the Reserve Bank of India’s (RBI) move to severely restrict operations of PPBL. For the second straight day, the stock price of One 97 Communications (OCL) which owns Paytm slid 20% and hit lower circuit of Rs487 on Friday, down 77% from IPO price.The stock got hammered even after founder and CEO Vijay Shekhar Sharma assured consumers that the Paytm app will continue working beyond February 29.
Earlier this week, RBI barred PPBL from adding funds to any customer accounts, ending the utility of most of its services with effect from March 1. Rivals, meanwhile, seem to be eating into Paytm’s market share. “We are seeing a surge in inbound requests from merchants for QRs and Smart speakers and we are making sure we meet that demand,” a PhonePe spokesperson said in response to queries. Sources said that players like PhonePe and MobiKwik are boosting the presence of their on-ground sales representatives to get more merchants to their platforms.
“For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance. India will keep winning global accolades in payment innovation and inclusion in financial services—with PaytmKaro as the biggest champion of it,” Sharma posted on social media platform X during the day.
In a call with investors on Thursday, Paytm said that it would have to halt loan distribution for two weeks and figure out how to transition merchant QR code accounts from PPBL to other banks. The firm’s worst case impact due to the RBI measures would be Rs 300-500 crore on its EBITDA, it said. Analysts continue to be sceptical of the firm’s growth prospects. “Overall, this development (RBI action) highlights the regulatory overhang that surrounds Paytm model which in our view is the biggest risk for this business. And clearly Paytm is far from becoming a stable format (from a regulator’s perspective),” Bernstein said in a note issued earlier this week.