Home Business Paytm shares hits upper circuit again, surged by 5% to 376.25 – Times of India

Paytm shares hits upper circuit again, surged by 5% to 376.25 – Times of India

Paytm shares hits upper circuit again, surged by 5% to 376.25 – Times of India


NEW DELHI: One97 Communications shares, which operates under the brand name Paytm, hits upper circuit again on Tuesday. Its shares increased by nearly 5% and were trading at 376.25 apiece on BSE and NSE in early morning trades, respectively. Notably, it hit an upper circuit on Monday as well and closed at 358.35.
Sensex started in red with 140 points decline to 72,568 from previous close at 72,708.16 and the Nifty was down 48.70 points or 0.22 percent at 22,073.60.
In a dramatic series of events that has seen the Reserve Bank of India (RBI) clamp down on Paytm Payments Bank, the fintech sector has been on a roller coaster. The RBI‘s directive on January 31, prohibiting Paytm Payments Bank from accepting new funds, has led to a significant market backlash, with Paytm’s shares tumbling over 50%, wiping out approximately $3.1 billion in shareholder value.
However, Paytm saw its shares surge by 10% in two days.
Meanwhile, a probe by Enforcement Directorate(ED) into possible foreign exchange violations by Patym Payments bank has not yet found any breaches so far, Reuters reported, quoting a government source.
The investigation, however, has found some lapses related to so-called know-your-customer rules that verify the profiles of users, said the source, who asked not to be named as the matter is not public.
But, the “Enforcement Directorate has not yet detected any foreign exchange management act violations by Paytm Payments Bank,” the source told Reuters.
There were also some issues with a suspicious transaction report not being generated by the bank, the source said, adding that the Enforcement Directorate is still ascertaining whether to bring charges for any potential violations.
The Enforcement Directorate did not immediately respond to a request for comment.
The RBI’s action was triggered by a breach of the statutory limit of Rs 1,000 crore ($136 million) on deposits held by payments banks, which are meant to provide basic banking services to the unbanked and underbanked segments of the population.
The RBI also asked customers and merchants of Paytm Payments Bank to shift their accounts to other banks by February 28.
The move sent Paytm shares tumbling more than 50% since then, eroding around $3.1 billion in shareholders’ wealth.

15-day extension

On Friday, Paytm Payments Bank secured a 15-day extension for its wind-down to March 15 from the RBI, giving it more time to transfer its accounts and wallet balances to other banks.
Also on Friday, Paytm said it signed on a new banking partner, Axis Bank, to try to keep some of its popular products running and survive its current crisis.
The collaboration will allow Paytm’s merchants to continue using the company’s QR codes, soundbox and card machines for accepting payments, the company said in a statement.

What to do with Paytm stocks

Analysts at Bernstein said the deadline extension would help smoothly transfer Paytm Payments Bank accounts and said Paytm’s merchants being able to use the company’s QR codes, soundbox and card machines is a “major positive”.
Citi analysts expect more banking partnerships, like the one with Axis, calling them “significant positives for ongoing business”.
However, Citi kept its “sell” rating on the stock, while Bernstein maintained “outperform.”
Jefferies, however, said it would stop coverage of Paytm until news on regulatory actions “settles”. Two brokerages have dropped coverage in the past month, according to LSEG data.
Now 13 analysts cover Paytm, with five of them recommending selling the stock, compared with none for the past year. The overall average rating, however, is the equivalent of “hold”, per LSEG data.
The median price target on the stock has dropped 31% in the past month to 625 rupees. The stock is currently at 358.35 rupees.
Paytm, which went public in November last year, was backed by investors such as Alibaba, SoftBank and Berkshire Hathaway. It offers a range of services, including payments, e-commerce, lending, insurance and gaming.
(With inputs from agencies)


Source link


Please enter your comment!
Please enter your name here