Shares of fintech major Paytm zoomed over 13 per cent to hit an intraday high of Rs 594.95 on Thursday. However, the stock still traded 70 per cent down from its all-time high of Rs 1,961.05.
It closed 9.53 per cent higher at Rs 574.35 against the previous close of Rs 524.40 on the BSE. Market cap of the firm rose to Rs 37,247.99 crore.
Brokerage house Dolat Capital noted that Paytm faces the double whammy of RBI notification for its Payment Bank restricting new customer onboarding and valuation capitulation for Fintechs across globe (especially for ‘high-growth but non-profitable stocks) in listed space.
It added that the previous Reserve Bank of India (RBI) notification while having not material impact on financial prospects, but would definitely hurt the growth confidence and some potential impact on usage till issue is resolved (we are assuming 100bps impact on our Growth CAGR as timeline is not clear). The monthly business metrics and overall momentum on Revenue has been very strong and thus not much of worry per se.
“We firmly believe that Paytm will emerge as the best internet play in Indian market given its wide variety utilities that service both ‘Needs and Wants’ of consumers and maintain our Buy rating on the stock with DCF based target price of Rs 1,620 implying 9x/7x on its EV/Rev in FY24/FY25E (TP revised to account for lowered revenue estimate and higher risk premium),” Dolat Capital said in its recent report.
RBI had asked Paytm Payments Bank to immediately stop opening new accounts amid “material supervisory concerns” observed in the bank.
Paytm said it has been informed that RBI’s action does not impact any existing customers of PPBL, who can continue to use all banking and payment services without interruption.
“All existing users of Paytm UPI, Paytm Wallet, Paytm FASTag, and bank accounts can continue to use these instruments, including debit cards and net banking, for payments,” it said.
“The bank is taking immediate steps to comply with RBI directions, including appointment of a reputed external auditor to conduct a comprehensive system audit of its IT systems. PPBL remains committed to working with the regulator to address their concerns as quickly as possible,” the company added.
