Shares of One 97 Communications fell 5 per cent to the day’s low of Rs 385.90 on Thursday. The shares had hit the lower brand circuit on Wednesday to hit 406.15 apiece.
This comes as Paytm Payments Bank finds itself at the receiving end to non-compliance and supervisory concerns, as per RBI. Paytm had recently reconstituted the company’s board with induction of several key industry veterans after Vijay Shekhar Sharma had resigned as part time non-executive Chairman of Paytm Payments Bank Ltd.
As per experts, the fall in share price indicates that Sharma’s resignation has failed to soothe investors nerve. Paytm shares has hit the upper circuit on two consecutives sessions earlier.
In January, RBI undertook regulatory action against the Paytm Payments Bank, barring it from accepting any fresh deposits, or top-ups in wallets, accounts, FASTags and other instruments from February end. The deadline was later extended to March 15.
The most recent blow has been Macqurie’s reiteration of an underperform rating on the counter for a price target of Rs 275. The Australian brokerage has taken adverse views on the counter on previous occasions as well.
In the latest stock review, Macquarie said that Sharma is trying to salvage some value from PPBL and sending a message to the regulator that he is willing to give up control of Paytm Payment’s Bank.
While the survival of PPBL is at stake, the banking regulator Reserve Bank of India (RBI) will have to provide relaxations, the brokerage note said. “We don’t expect RBI to authorise any related- party transactions between Paytm and PPBL in the future,” it said.
While some lending partners have revealed that they are looking again at their relationship with Paytm, the company’s lending business could take a hit if partners scale down or terminate their relationships with Paytm, Macquaries said further.
Paytm shares has rebounded during last couple of sessions to trade 20 per cent above the 52-week low of Rs 318 hit on February 16. However, the stock is still around 50 per cent below the January 31 closing price of Rs 761.20.
“We expect Paytm to lose 5-7ppt of its 25 per cent share in the payments industry, driven by loss of wallet (2-3ppt permanent loss) and the rest due to merchant/customer churn,” brokerage firm UBS said.
Morgan Stanley has maintained an ‘equal-weight’ call on the stock with a target price of Rs 555 while Goldman Sachs has a ‘neutral’ rating on the stock with a revised target price of Rs 450. Renowned brokerage firm Jefferies has discontinued its rating on Paytm after moving it to the list of ‘non-rated’ stocks.
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