Paytm Shares Rebound After 3 Sessions Of Pain: Is the Nightmare Over?
Advertising
Benzinga – Paytm (NS:) shares bounced back on Tuesday, shaking off a morning dip and breaking a three-day lower circuit deadlock.
What Happened: The stock hit the lower circuit of trading on three consecutive days following the Reserve Bank of India’s extensive restrictions on Paytm’s payments bank operations, prohibiting new deposits and credit transactions starting February 29.
The stock has lost nearly 40% of its value since the RBI curbs were announced last Wednesday.
Adding to Paytm’s challenges, the Confederation of All India Traders (CAIT) advised traditional businesses to explore alternative payment apps due to the RBI restrictions. CAIT expressed concerns about potential financial disruptions for small traders and others reliant on Paytm.
There have been some reports of Jio Financial and HDFC Bank (NS:) being in talks to take over the struggling fintech major’s wallet business, but the Reliance (NS:)-owned firm has refuted the reports.
What Analysts Say: Brokerages have slashed Paytm’s stock and target prices, with Jefferies downgrading the target to ₹500 and Macquarie reducing it to ₹650. Paytm rebutted the Enforcement Directorate’s investigation outcome amid reports of potential money laundering charges.
To ease concerns, founder Vijay Shekhar Sharma assured employees of no layoffs during the crisis. He said that Paytm is actively engaging with the RBI and exploring potential partnerships with other banks to navigate the situation.
He added that the company was not “entirely sure” what went wrong, but was reaching out to the central bank to figure it out. Co-founder Sharma and other Paytm officials were reportedly meeting with the RBI on Monday to discuss a roadmap to address regulatory concerns, Reuters reported.
Price Action: Paytm shares were up 4.9% at ₹460 in morning trade on Tuesday.
Read Next: Why Ashok Leyland (NS:) Share Price Is Jumping After Q3 Print
Read the original article on Benzinga
