In today’s trading session, the stock was locked at 5% upper circuit limit at ₹376 per, marking the third consecutive day of a 5% rally. During these three days, the stock gained a total of 16%.
Factors driving the rally
This resume of buying interest can be attributed to several factors, including the RBI extending the deadline, positive comments from management, and recent developments such as the Enforcement Directorate (ED) finding no violation under the Foreign Exchange Management Act, an agreement with Axis Bank. , and a superior rating from Bernstein.
Also Read: Paytm, Nykaa among new-age tech stocks trading below IPO price, Zomato outlier
The RBI on Friday (February 16) gave 15 more days till March 15, 2024 to Paytm Payments Bank (PPBL) to stop deposits, credit transactions or recharges in some customer accounts, wallets and FASTags, considering the interest. from customers, including merchants.
According to an order dated January 31 by the central bank, PPBL has been asked to stop further deposits, credit transactions or charges in any customer accounts, prepaid instruments, wallets, FASTags and National Common Mobile Cards, after February 29.
The RBI said this is being done keeping in mind the interest of customers (including merchants) of PPBL, who may require some more time to make alternative arrangements, and the larger public interest.
Also Read: Paytm’s loss is BharatPe, PhonePe, MobiKwik and other fintechs’ gain
Additionally, the company announced the change of its node account to Axis Bank (opening an Escrow Account). A modification in the node account setting will enable merchants to continue accepting digital payments through Paytm’s QR code or card machine.
This was done to alleviate concerns about possible suspensions of merchant payments. This means customers can continue to use, withdraw and transfer funds from their accounts. However, after March 15, 2024, customers will not be able to deposit money into their Paytm Payments Bank accounts.
Also Read: ‘Don’t fall for any rumour’: Paytm QR, Soundbox and EDC will work even after March 15, claims Vijay Shekhar Sharma
Vijay Shekhar Sharma, founder and managing director of Paytm, clarified that Paytm QR, Soundbox and EDC (card systems) will continue to work even after March 15. He referred to a document published by the RBI, emphasizing its clear guidance and encouraging users. to avoid falling in love with any rumours.
Meanwhile, brokerage firm Bernstein has assigned an ‘outperform’ rating to Paytm, along with a target price of ₹600 per share. According to the brokerage, the actions of the Reserve Bank of India (RBI) are directed primarily at Paytm Payments Bank (PPBL), with no intention of disrupting other integrated functions of Paytm.
This distinction is crucial to understanding the scope of regulatory measures affecting the company. It added that the linking of merchant operations to a non-PPBL bank is a “major positive” that carries significant benefits for Paytm.
On the other hand, global brokerage firm Jefferies has suspended coverage of Paytm until there is more stability in the news surrounding the struggling Indian fintech major.
Another global brokerage firm, Macquarie, downgraded the stock to “Underperform” and significantly lowered its target price to ₹275 per share from an earlier target price of ₹650, citing the company’s sharp reduction in revenues across various segments.
Disclaimer: The opinions and recommendations given in this article are those of individual analysts. These do not represent the views of Mint. We advise investors to check with certified experts before making any investment decisions.
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Published: 20 Feb 2024, 12:38 IST
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