NSE: Paytm, the popular Indian fintech company, witnessed a significant downturn in its share prices on Friday, with a 20 percent drop recorded on both the Bombay Stock Exchange and the National Stock Exchange. The shares hit the lower circuit, closing at Rs 487.05 and Rs 487.20, respectively.
This decline marked the second consecutive day of falling shares for One97 Communications Limited, the parent company of Paytm. The trend has raised concerns among investors and analysts about the overall health of the company’s financial standing.
Paytm stock has decreased by -273.30(-35.94%) in the last 5 days, this share has decreased by -197.95(-28.89%) in the last 1 month, and Paytm has decreased by -71.10(-12.74%) in the last 1 year.
RBI Directive Impact
The Reserve Bank of India (RBI) has directed Paytm Payment Bank Limited (PPBL) to halt the acceptance of deposits or top-ups in any customer account, wallet, Fastag, and other devices after February 29. This directive has contributed to the negative sentiment surrounding Paytm shares.
Financial Impact and Market Capitalization Erosion
Financial Setback
On Thursday, Paytm shares fell by 20 percent, resulting in a substantial erosion of the company’s market capitalization. The value plummeted by Rs 30,931.59 crore in just two days, reaching Rs 17,378.41 crore.
Projected Operating Profit Hit
The RBI’s directive is expected to impact Paytm’s annual operating profit by an estimated Rs 300-500 crore. This financial setback comes as a consequence of the regulatory restrictions imposed on PPBL.
RBI’s System Audit Report
The central bank’s decision to bar PPBL from accepting deposits or top-ups stems from a comprehensive system audit report and subsequent compliance verification by external auditors. One97 Communications Limited holds a 49 percent stake in PPBL.
Vijay Shekhar Sharma Assures Continuity
Founder’s Reassurance
In response to growing concerns, Paytm founder Vijay Shekhar Sharma assured users on Friday that the app will continue to function beyond February 29. Despite the regulatory restrictions imposed by the RBI, Sharma emphasized that Paytm’s operations remain unaffected.
Commitment to Users
Vijay Shekhar Sharma, in a post, reiterated the company’s commitment to users, ensuring that the popular fintech app will continue to provide its services seamlessly, assuaging fears regarding the impact of the recent developments.
It’s important to note that the situation is dynamic, and further developments may unfold in the coming days.