On February 14, Paytm shares took another hit, dropping by more than 9% following reports of an investigation by the Enforcement Directorate (ED) into alleged violations of foreign exchange regulations and money laundering concerns involving Paytm and its affiliate, Paytm Payments Bank.
The Enforcement Directorate (ED) has launched a preliminary inquiry into the activities of Paytm and its associated entities to probe potential breaches of foreign exchange laws and allegations of money laundering.
As the crisis surrounding parent company One97 Communications deepened, Paytm shares extended their losses, falling by an additional 9% early on February 14. The stock slipped below the Rs 350 mark, trading at Rs 344.95 as of 10:28 pm.
In the aftermath of the Reserve Bank of India’s (RBI) directive, foreign brokerages such as CLSA, Morgan Stanley, Jefferies, and Bernstein have slashed their target prices for One97 Communications (Paytm) by 20-60%. Among them, Macquarie emerged as the most bearish on the stock, downgrading it to ‘underperform’ and substantially reducing the target price from Rs 650 to Rs 275.
This downgrade by Macquarie comes exactly a year after it had upgraded the stock from ‘underperform’ to ‘outperform’, marking a significant reversal in its outlook on Paytm’s future prospects.
