SUMMARY
Shares of One97 Communications, parent of Paytm, gained 5% to INR 449.30 on Tuesday
Paytm founder and chief executive officer Vijay Shekhar Sharma stepped down from the board of Paytm Payments Bank on Monday
Following the resignation, Macquarie maintained its 'Underperform' rating on the One 97 Communications Ltd stock with an earlier target price of INR 275 per share
paytm
shares remained volatile during Tuesday’s trading session, a day after Vijay Shekhar Sharma resigned as part-time non-executive chairman and board member of Paytm Payments Bank (PPBL).
The shares of One97 Communications, parent of Paytm, jumped another 5% to INR 449.30 on Tuesday. The shares were trading at INR 436.95 apiece at 11:01 am.
Paytm founder and chief executive officer (CEO) Vijay Shekhar Sharma stepped down from the board of Paytm Payments Bank on Monday (February 26).
In a filing with the bourses, the fintech startup said that Sharma resigned as the part-time non-executive chairman and board member of the payments bank. It also said that a newly-reconstituted board will now helm the affairs at the company.
The company also said that the payments bank will soon commence the process of appointing a new chairman.
Following the resignation, Macquarie maintained its ‘Underperform’ rating on the One 97 Communications Ltd stock with an earlier target price of INR 275 per share, as the global brokerage believes the survival of Paytm Payments Bank is in question, even as Sharma has stepped down from the bank board.
As per the brokerage analysis, by resigning from the board, Sharma is signaling to the regulator his readiness to relinquish control of Paytm Payments Bank. Currently, he owns 51 percent of the bank.
Macquarie analysts also noted that they do not expect the Reserve Bank of India (RBI) to authorise any related-party transactions between Paytm and Paytm Payments Bank going forward.
According to Macquarie, certain lending partners are reevaluating their association with Paytm, which could potentially impact its lending business if these partners choose to scale down or terminate their relationship with the company.
Earlier this month, brokerage Macquarie downgraded One97 Communications to ‘underperform’ from an earlier ‘neutral’ rating and lowered its price target (PT) to INR 275 from INR 650.
Sharma’s resignation and the reshuffling of the board occur amidst a turbulent period for Paytm Payments Bank.
Recently, the Reserve Bank of India (RBI) imposed several restrictions on the payments bank, prohibiting it from accepting deposits, conducting credit transactions, or facilitating top-ups in customer accounts due to “persistent non-compliances and ongoing material supervisory concerns.”
Initially, the central bank also barred the bank from providing other banking services, including UPI facilities and fund transfers, effective from February 29. However, some of these restrictions were later extended to March 15.
