Paytm drops 32% in month | Reaches a new low | Down 74% from IPO price
Paytm drops 32% in a month and reaches a new low; it’s down 74% from its IPO price.
Written By: Sonali Singh
On Tuesday’s intra-day trade on the BSE, shares of One97 Communications. The parent company of digital payments giant Paytm; continued to be under pressure and touched a new low of Rs 550.50, down 3% on high volume.
The stock has dropped 32% in the last month due to a steady stream of unfavourable news. The S&P BSE Sensex, on the other hand, was down 0.21 percent over the same time period. In intraday trade on November 18, 2021, the stock reached a new high of Rs 1,961.05 but failed to reach its issue price after listing. The stock has lost 74% of its value from its initial public offering (IPO) price of Rs 2,150 per share.
Paytm was down 0.5 percent at Rs 562.65 at 09:36 a.m., vs a 0.2 percent drop in the benchmark index. In the first 20 minutes of trading on the NSE and BSE, 4.2 million equity shares had changed hands.
Because of regulatory concerns, the Reserve Bank of India (RBI) stopped Paytm Payments Bank (PPBL) from onboarding new clients with immediate effect on Friday, March 11, 2022. Paytm, India’s largest digital payments company uses PPBL to handle transactions.
PPBL has been ordered by the banking regulator to employ an IT audit firm to undertake a complete system audit of its IT system. Following a review of the audit, Paytm PB will require particular clearance from the RBI to resume user onboarding. Paytm claimed that PPBL was taking urgent efforts to comply with RBI instructions. And that it was looking to hire a reputable external auditor to perform a full systems audit of its IT infrastructure.
The RBI ruling, however, has no effect on current PPBL clients. Who may continue to utilise all banking and payment services without interruption, according to the business. In an exchange filing, all existing users of Paytm UPI, Paytm Wallet, Paytm FASTag, and bank accounts can keep using these instruments for payments, including debit cards and online banking.
Macquarie cut Paytm’s target price to Rs 450 from Rs 700 in a report on the firm on March 16, 2022. “In our opinion, recent events have severely reduced the likelihood of obtaining a banking licence to lend”. Other regulatory impediments include the digital payments paper, which might curb wallet costs. As well as stricter BNPL and KYC standards, according to the international brokerage business.
“The problem with valuing Fintechs and new-age firms, in general, is that they have negative profitability and cash flow. As a result, multiples are calculated using sales figures, which can be highly subjective. As a result, multiples for such corporations might dramatically correct. The monetisation of UPI and the attainment of a banking licence are both risks to our suggestion”; according to the brokerage business.
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