Stock Market update: Paytm share price slips below ₹900/piece

Stocks of Paytm fell by 4% to ₹881.05 per equity share against the previous close at ₹960.30 per share, in today’s early trade.

The shares of Paytm declined by 4% at ₹881.05 per share against the previous close at ₹960.30 per share, in today’s early trade. The company has lost about 60% of its value compared to its issue price of ₹2,150.

On listing, foreign portfolio investors (FPIs) held a 10.37% stake, while individual shareholders held 12.05% holding in Paytm, the shareholding pattern data shows. The company is yet to file its December quarter shareholding pattern.

On January 10, 2022, global brokerage Macquarie came out with a report on One97 Communication maintaining it’s ‘under perform’ rating on the stock and reducing its target price (TP) to ₹900. Macquarie’s previous target price for Paytm was ₹1,200 in November.

The Reserve Bank of India’s (RBI’s) proposed digital payments regulations that could cap wallet charges. The payments business still forms 70% of overall gross revenues for Paytm and, hence, any regulations capping these charges could impact revenues significantly. Add to that the recent rejection of Paytm’s foray into insurance by the Insurance Regulatory and Development Authority. The brokerage believes this could impact the company’s prospects of getting a banking license.

“Paytm has a history of net losses and it may not be able to achieve profitability. In the event that payment processing charges payable to financial institutions and card networks increase significantly, and Paytm is not able to pass on these higher processing charges to its merchants or consumers, it may not be profitable,” brokerage HDFC Securities had said in its IPO note.

It had added that the ongoing COVID-19 pandemic and measures intended to prevent its spread have had, and may continue to have, a material and adverse effect on the business and results of operations.

“Paytm offers some of its services in partnership with a group company, Paytm Payments Bank. Any failure by Paytm Payments Bank to support these services could adversely impact these services and could impact the overall business, financial condition and results of operations are among key risks and concerns,” it said.

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