Paytm slips 32% in one month, hits new low; tanks 74% from issue price

Shares of One97 Communications, the parent company of digital payments major Paytm, continued to remain under pressure and hit a new low at Rs 550.50, down 3 per cent on the BSE in Tuesday’s intra-day trade on the back of heavy volume.

In the past one month, the stock has tanked 32 per cent owing to persistent negative news flow. In comparison, the S&P BSE Sensex was down marginally by 0.21 per cent during the same period. The stock hit a record high of Rs 1,961.05 on November 18, 2021, in intra-day trade, but failed to touch its issue price post listing. The stock has lost 74 per cent from its issue price of Rs 2,150 per share.

At 09:36 am; Paytm traded down 0.5 per cent at Rs 562.65, as against a 0.2 per cent decline on the benchmark index. A combined 4.2 million equity shares had changed hands in the first 20 minutes of trades on the NSE and BSE.

The Reserve Bank of India (RBI) on Friday, March 11, 2022 barred Paytm Payments Bank (PPBL) from onboarding new customers with immediate effect because of certain supervisory concerns. PPBL processes transactions for India’s digital payments giant Paytm.

The banking regulator has directed PPBL to appoint an IT audit firm for conducting a comprehensive system audit of its IT system. Paytm PB will need specific permission from the RBI to restart onboarding of customers following a review of the audit. Paytm has said that, PPBL, was taking immediate steps to comply with RBI directions and was looking to appoint a reputed external auditor to conduct a comprehensive systems audit of its IT systems.

However, the company stated that the RBI order does not impact any existing customers of PPBL, who can continue to use all banking and payment services without interruption. All existing users of Paytm UPI, Paytm Wallet, Paytm FASTag, and bank accounts can continue to use these instruments, including debit cards and net banking, for payments, in an exchange filing.

On March 16, 2022 in a note on the company, Macquarie slashed Paytm’s target price to Rs 450 from Rs 700 earlier. “The recent developments significantly reduce the probability of getting a banking license to lend, in our view. Other regulatory headwinds include the digital payments paper potentially capping wallet charges and tougher BNPL and KYC regulations,” the foreign brokerage firm said.

"The challenge in valuing Fintechs or new-age companies in general is negative earnings and FCF. Hence multiples are based on sales numbers – the level of subjectivity here can be very high. Hence, multiples for such companies can correct very sharply. Risks to our recommendation include monetisation of UPI and receipt of a banking license", the brokerage firm said.