Paytm fall continues, drops nearly 45% in three sessions

Paytm fall continues: Payments aggregator Paytm shares on Monday dropped 10 per cent to hit a fresh 52-week low of Rs 438.35 on Monday. Notably, the shares have plunged by almost 45 per cent over the course of last three trading sessions.

The drop comes in the wake of major action taken by the Reserve Bank of India (RBI) against One97 Communication, the parent company of Paytm. The RBI's recent imposition of restrictions on Paytm Payments Bank, prohibiting it from offering banking services to its customers, has impacted investor sentiment. Citing "non-compliance and ongoing material supervisory concerns" at One 97 Communications, the RBI underscored the gravity of the situation.

In response to the regulatory intervention, several brokerages have downgraded Paytm's stock and revised their target prices downward. Jefferies, for instance, downgraded Paytm to 'underperform' from 'buy' and slashed the target price by more than half to Rs 500 from Rs 1,050 per share. Macquarie also adjusted its target price to Rs 650 per share while maintaining a 'neutral' stance.

The regulatory scrutiny intensified after a comprehensive IT audit conducted by the RBI revealed persistent non-compliance issues at One 97 Communications. This scrutiny has led to concerns among lenders, prompting Paytm to pause its lending platform operations temporarily.

Bhavesh Gupta, COO of Paytm, stressed that the ongoing dialogues with banks to address concerns and clarify the potential impact on the lending portfolio. Meanwhile, Paytm founder Vijay Shekhar Sharma reassured employees of job security amidst the turbulent times, affirming ongoing efforts to engage with the RBI and establish partnerships with other banks.