Paytm slips 32% in one month, hits new low; Cabinets 74% of the issue price



Shares of One97 Communications, parent company of major digital payments major Paytm, continued to stay under pressure and reached a new low of Rs 550.50, down 3 per cent over BSE in trade during Tuesday on the back of higher volume.

In the past month, the stock is down 32 percent due to the continued flow of negative news. By comparison, the S&P BSE Sensex was marginally down 0.21 percent over the same period. The stock reached a record high of Rs 1961.05 on November 18, 2021 in daily trading, but failed to touch the issue price after the listing. The stock lost 74 per cent of its issue price of Rs 2,150 per share.

At 09:36 am Paytm was trading down 0.5 per cent at Rs 562.65, against a 0.2 per cent drop in the benchmark index. 4.2 million shares of the combined stock were traded in the first 20 minutes of trading on the New York Stock Exchange and the Stock Exchange.

The Reserve Bank of India (RBI) on Friday, March 11, 2022 banned Paytm Payments Bank (PPBL) from taking on new clients with immediate effect due to some supervisory concerns. PPBL processes transactions for India’s digital payments giant Paytm.

The banking regulator directed PPBL to appoint an IT audit firm to conduct a comprehensive system audit of its IT system. Paytm PB will need specific permission from RBI to re-qualify clients after audit review. Paytm said that PPBL, was taking immediate steps to comply with RBI directives and was looking to appoint a reputable external auditor to conduct a comprehensive systems audit of its IT systems.

However, the company stated that the RBI request does not affect any existing PPBL customers, who can continue to use all banking and payment services without interruption. All existing users of Paytm UPI, Paytm Wallet, Paytm FASTag and bank accounts can continue to use these tools, including debit and net bank cards, for payments, on the exchange deposit.

On March 16, 2022 in a note on the company, Macquarie lowered Paytm’s target price to Rs 450 from Rs 700 earlier. “Recent developments significantly reduce the likelihood of obtaining a bank license to lend, in our view. Other adverse regulatory factors include digital payments paper potentially blocking wallet fees and stricter BNPL and KYC regulations,” the foreign brokerage said.

“The challenge in valuing Fintech or modern companies in general is negative earnings and FCF. Hence multipliers are based on sales figures – the level of subjectivity here can be very high. Thus, multipliers for these companies can be corrected very sharply. Our recommendation includes UPI monetization and license receipt banker,” said the brokerage firm.

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