Paytm shares plunge 20%, now below Rs 500. What analysts say

Shares of One 97 Communications Ltd (Paytm) nosedived 20 per cent on Friday morning, in addition to a similar plunge in the previous session, to slip below the Rs 500-mark, following  the RBI's directives on Paytm Payment Bank. With this, the stock is down 51 per cent over its 52-week high of Rs 998.30 hit in October last year. The stock fell as Paytm estimated Rs 300-500 crore hit on Ebitda annually due to the RBI restrictions. The company held a conference call on Thursday.

The Paytm stock was locked at its 20 per cent lower circuit limit of Rs 487.05 on BSE. Arihant Capital noted that the Paytm management in its analyst call said the RBI actions were a big speed bump and that operational changes would be required. Paytm highlighted that the migration process is expected to be completed before the cut off date. Though the company’s profitability will be impacted in the short term, Paytm expected it to improve in the long term. Paytm, Arihant said, aims to offset the impact in the medium term and enhance profitability through various measures.

Paytm shares: After 20% plunge, will the stock fall further?

In a tweet, Vijay Shekhar Sharma said: "To every Paytmer, Your favourite app is working, will keep working beyond 29 February as usual. I with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance."

"The RBI's recent punitive actions will significantly affect Paytm's business performance. While the regulator had previously restricted new customer onboarding at PPBL, the latest measures go further, preventing PAYTM from conducting any credit or deposit transactions after 29th Feb’24. Apart from impacting payments, these measures will also affect Paytm's  financial business, as the company cross-sells financial products to platform users," Motilal Oswal Securities said.

Motilal Oswal said it maintained a watchful stance on the resilience of Paytm's business model and its ability to navigate the uncertain regulatory and macro environment. "We maintain our Neutral rating with a target of Rs 575."

Also read: Paytm shares: Macquarie says RBI ban implications quite serious, near term solution unlikely

Also read: Paytm shares: Jefferies says RBI restriction to have collateral impact on lending biz, cites risk to earnings, valuations

Also read:  Budget 2024: Negative for IRCON, RVNL and RITES; positive for IREDA, BEL & others