Paytm shares up 21% in four sessions, mcap nears Rs 26,000 crore
Shares of One 97 Communications, the parent company of fintech player Patytm, continued to attract investors for the fourth session in a row.
The stock hit an upper circuit of 5 per cent on Tuesday to Rs 408.85 on Tuesday, hitting an upper circuit for the third straight session. The stock was trading around Rs 338-levels on Thursday, March 14.
The 21 per cent rally in the troubled new-age internet company has helped it command a total market capitalization of close to Rs 26,000 crore. However, the stock is still about 60 per cent down from its 52-week highs of Rs 998.30. The stock had tested 52-week lows of Rs 318.35 on February 16. The stock has rebounded 28.4 per cent from those levels in a month.
The Reserve Bank of India barred Paytm Payments Bank (PPBL) from accepting new deposits and lending credit due to non-compliance across various departments on January 31. Despite regular communication with the bank, these issues remained unaddressed, prompting the RBI to take decisive action. The central bank extended the deadline from February 29 to March 15.
Last week, The National Payments Corporation of India (NPCI) gave approval to One97 Communications to participate in UPI services as a third-party application provider under a multi-bank model. Under the new model, Paytm will provide the payment service in partnership with four new banks-Axis Bank, HDFC Bank, State Bank of India, and Yes Bank.
Recently, YES Securities upgraded One 97 Communications to ‘buy’ noting its dependence on the wallet business for revenue had already declined materially to only about one-sixth of Payments revenue; the NPCI approval to OCL to participate in UPI as a third-party application provider (TPAP) in the multi-bank model keeps OCL’s UPI business intact.
It said that the client loss due to reputational damage and on-ground confusion will be well contained; Loan distribution has undergone a reset but partner addition will be supportive and the past successes underline the competitive DNA of One97 Communications as an organisation. YES Securities has a target price of Rs 505 on the stock.
NPCI’s grant TPAP approval under multi-bank model is a positive development and in-line with expectations, said Morgan Stanley. “We continue to await an update on potential impact to Paytm’s businesses during February 24, and updated commercials for it as Paytm Payment Bank’s business moves to other banks. The global brokerage has an ‘equal-weight’ rating with a target price of Rs 555.
