In a significant development impacting the financial markets, Paytm witnessed a staggering 20% drop in its share price, triggered by the Reserve Bank of India’s (RBI) restrictions on Paytm Payments Bank Limited (PPBL). This event unfolded on February 1, with Paytm shares opening at a lower value of ₹608.80 on the Bombay Stock Exchange (BSE) and swiftly hitting a 20% lower circuit just moments after the market’s opening bell.
RBI’s Impact on Paytm Shares
Financial analysts attribute the downward spiral in Paytm’s share value to the regulatory constraints imposed by the RBI on PPBL. Industry experts suggest that these restrictions could significantly affect the lending operations of Paytm, which contribute approximately one-fifth of the company’s net revenue. The prevailing sentiment indicates that the stock may continue to face pressure until an official statement from Paytm management addresses the ramifications of the RBI’s measures on its business operations.
Budget 2024 and Paytm’s Share Price
Discussing the unexpected crash in Paytm’s share price on the backdrop of Budget 2024, Avinash Gorakshkar, Head of Research at Profitmart Securities, explained, “Paytm’s shares are witnessing a sell-off due to the recent restrictions imposed by the Reserve Bank of India on Paytm Payments Bank. This move is anticipated to impact Paytm’s lending business, constituting approximately 20% of the company’s net revenue.
Evaluating Paytm’s Share Price Outlook
Anticipating a further decline in Paytm shares, Sumeet Bagadia, Executive Director at Choice Broking, offered insights, “The chart pattern indicates weakness in Paytm’s share price, and it may weaken further if it breaches the critical support levels currently positioned at ₹590 to ₹600 per share. Those holding Paytm shares in their portfolio should consider maintaining a stop loss at ₹545 per share.
Compliance Woes for Paytm
The RBI’s imposition of restrictions on PPBL, effective from January 31, stemmed from a system audit report and subsequent compliance validation by external auditors. Under Section 35A of the Banking Regulation Act, 1949, PPBL is prohibited from accepting deposits, top-ups, or any form of transaction in customer accounts, wallets, or FASTags after February 29.
In conclusion, Paytm finds itself at a crossroads, navigating the challenges posed by regulatory restrictions and market reactions. Investors and industry observers keenly await Paytm management’s official communication to gain clarity on the impact of the RBI’s measures on the company’s financial landscape.
