Paytm Slumps 5% To Hit Lower Circuit; UBS Cuts Price Target

Shares of One97 Communications Limited, the parent entity of Paytm, hit a 5% lower circuit during the early trading session on Wednesday (February 28), falling from the previous close of INR 427.5 on Tuesday to INR 406.15. 

As of Wednesday at 12:02 pm, Paytm stock was trading at INR 406.15 on BSE. 

Meanwhile, foreign brokerage UBS has cut the fintech major’s target price to INR 510 from INR 650. 

“We expect Paytm to increase its marketing spend to win back lost customers, resulting in elevated EBITDA losses in FY25,” said UBS analysts.

In a note on Wednesday, UBS said that Paytm would likely experience near-term financial impact on its business along with some permanent loss of business in FY25.

It expects Paytm to lose about 5-7 percentage points of its 25% share in the payments industry, driven by the loss of wallet and the rest due to merchant or customer churn.

This comes two days after Vijay Shekhar Sharma resigned as part-time non-executive chairman and board member of Paytm Payments Bank (PPBL). 

Sharma stepped down from the board of Paytm Payments Bank on Monday (February 26). In a filing with the bourses, the fintech startup also mentioned that a newly reconstituted board will now oversee the affairs at the company. 

Following this, shares of Paytm, jumped another 5% to INR 449.30 on Tuesday, trading at INR 436.95 apiece at 11:01 am.

Despite a 5% surge in the morning session on both the Bombay Stock Exchange (BSE) and the National Stock Exchange (NSE), Paytm ended in the red on Tuesday.

Paytm’s stock faced a downturn after January 31 when the RBI imposed stringent restrictions on Paytm Payments Bank. The RBI issued a directive restricting Paytm Payments Bank from conducting various transactions, including deposits, credit transactions, and UPI facility, after February 29.

After a significant decline of over 50% since January 31, the company’s shares rebounded towards the end of last week. On February 21, Paytm’s shares opened 5% higher, once again reaching the upper circuit at INR 395.25 on the BSE. The positive trend continued as Paytm shares reached the upper circuit on Tuesday (February 27). 

The development is linked to the approaching deadline for the implementation of business restrictions imposed by the RBI on Paytm Payments Bank.

The central bank has set a March 15 deadline for the payments bank to stop all deposits or credit transactions or top-ups in any of its customer accounts. It has also barred the payments bank from offering other banking services, such as UPI facility and fund transfers post March 15.

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