Paytm Shares Slump 10% After Govt Dismisses MDR Speculation

Shares of Paytm parent One97 Communications tumbled as much as 10% to INR 864.40 during the early trade today following the finance ministry’s clarification on reports about the possible introduction of a merchant discount rate (MDR) on unified payments interface (UPI) transactions.

The stock, after 8 sessions of consolidation followed by two sessions of a declining spree, witnessed negative investor sentiment today.

The finance ministry’s clarification comes after it was reported yesterday that the Centre is mulling levying MDR on UPI transactions above INR 3,000.

“Speculation and claims that the MDR will be charged on UPI transactions are completely false, baseless, and misleading. Such baseless and sensation-creating speculations cause needless uncertainty, fear, and suspicion among our citizens,” the finance ministry said in an X post.

Meanwhile, global brokerage firm UBS estimates that even a 1 basis point contribution from MDR or an increase in government incentives could significantly support Paytm’s net payment margins.

However, in the absence of both these factors, the brokerage foresees over 10% downside risk to its adjusted EBITDA estimates for FY26 and FY27. Despite this, UBS gave a “neutral” rating on One97 Communications and a target price of INR 1,000 per share.  

At 12:21 PM, Paytm shares pared some of the losses and were trading 5.6% lower at INR 905.90 on the BSE. At this point, its market capitalisation and market volume stood at INR 57,788.14 Cr and 1.9 Cr, respectively.

Besides this, Paytm also approved  ESOP grants totalling 23.7 Lakh under ESOP 2019 to the eligible employees. The company also took note of 3.4 Lakh lapsed stock options yesterday.

A Short History Of Paytm Stock

Paytm entered the public market in November 2021 with an issue price that had an upper band of INR 2,150. Its shares were listed on the National Stock Exchange (NSE) at a 9% discount to the upper price band at INR 1,955.

Post debut, Paytm’s share price continued to slide, reflecting investor scepticism about its profitability, high valuation, and broader market volatility that impacted tech stocks. 

In January 2024, after the Reserve Bank of India’s (RBI) crackdown on Paytm Payments Bank, which raised concerns over the company’s compliance and business continuity, its shares plunged to an all-time low of INR 377 on June 12, 2024.

However, the company managed to stage a turnaround. By December 2024, Paytm shares had hit a 52-week high of INR 1,062.95. Investor confidence was rekindled after the company responded to the RBI’s actions by addressing compliance issues, restructuring its payments business, and pivoting towards other financial services.

Notably, the startup, which was earlier pursuing a revenue diversification strategy, reassured investors that it would streamline its focus back to the core fintech business.

As part of this shift, Paytm sold its ticketing business, Paytm Insider, to Zomato. Reportedly, it has also decided to completely phase out postpaid loans in the near future, besides stopping collection services for lenders on personal loans.

Paytm’s Profitability Around The Corner

Paytm’s consolidated net loss for Q4 FY25 remained flat year on year (YoY) at INR 544.6 Cr. Sequentially, the company’s loss grew 118% from INR 208.5 Cr in Q3 FY25. 

Had it not been for the INR 522.1 Cr exceptional loss incurred by the company during the quarter, Paytm would have reported a loss before tax of INR 19.9 Cr for the latest quarter. 

This is in tandem with Paytm’s Vijay Shekhar Sharma’s guidelines of delivering profit in Q1 FY26. 

Recent announcements by Paytm include a partnership with RBL Bank to offer its sound box, card machines to its merchant partners, UPI-enabled trading facilities for retail investors, UPI statement downloads, deployment of QR scan machines during the Mahakumbh for merchants and traders, and integration of Perplexity-enabled AI engine for Paytm users.

With a focus more on the bottom line now, Paytm’s operating revenue for Q4 FY25 dipped 19% YoY to INR 1,911.5 Cr from INR 2,267.1 Cr in Q4 FY24. Sequentially, this marked a 5% increase from INR 1,827.8 Cr operating revenue.