Paytm shares rally 10%, hit Rs 500 level for 1st time since February 8. Here's why

One 97 Communications Ltd (Paytm) climbed 10 per cent to hit its upper circuit limit in Friday's trade, breaching the Rs 500 level for the first time after February 8. The stock gained amid a Reuters report quoting a top finance ministry official suggested that Paytm has received approval from the government for its Rs 50 crore ($5.97 million) investment in a key subsidiary, Reuters suggested.

Paytm shares climbed 10 per cent to hit 10 per cent upper circuit limit at Rs 509.05 on BSE. Still the stock is off its 52-week high of Rs 998.30. The stock is down 21 per cent in 2024 so far and 35 per cent in the past one year.

The approval, which was stuck for months due to the Paytm's link to China, would remove the main stumbling block to the unit, Paytm Payment Services, resuming normal business operations, the Reuters report suggested. 

Paytm Payment Services is one of the biggest remaining parts of the fintech firm's business, accounting for a quarter of consolidated revenue in the financial year ended March 2023.

Earlier this month, Reuters reported that the government had given the investment the green light. Vivek Joshi, financial services secretary, said the company can approach India's central bank to seek a payment aggregator license which the RBI will evaluate.

(more to come)