Amid the turbulence surrounding Paytm’s payments bank woes, the fintech giant found hope on Monday as its shares surged 5%, hitting the upper circuit limit of Rs 358.35 on the bourses. This upswing came from two pivotal developments that injected fresh optimism into the company’s narrative.
The Reserve Bank of India (RBI) has extended the deadline for Paytm Payments Bank to release new deposits. The extension took place from February 29 to March 15. Bernstein analysts thought this was a good move by the RBI.
They said it would help smooth account transfers to the payment bank. Not the end of the story. Paytm has tied up with Axis Bank in a profitable move. This combination of steps enables QR codes, soundboxes, and card machines. The company is facing RBI regulations for alleged non-compliance with the guidelines.
Citi’s analysts viewed these partnerships as “significant positives” for Paytm’s ongoing business despite maintaining a “Sell” rating and a price target of Rs 550 on the stock. Echoing a similar sentiment, Bernstein highlighted the ability of merchants to use Paytm’s QR codes and other tools, provided they are linked to a non-Paytm Payments Bank account, as a “major positive.”
However, the road ahead remains rocky for the digital payments pioneer. Paytm’s shares have plummeted 53% since the RBI’s order against its payments bank on January 31, wiping out a staggering Rs 255.74 billion ($3.08 billion) in shareholder wealth. While analysts, on average, rate Paytm a “Hold,” the stock carries five “Sell” or “Strong sell” recommendations – the highest in at least a year, according to LSEG data.
As Paytm navigates this tempestuous terrain, its ability to chart a course that satisfies regulatory demands and business imperatives will be closely watched by investors and industry peers alike.
