Shares of Vijay Shekhar Sharma-led One97 Communications, parent company of Paytm, tanked another 20 per cent on Friday, after the Reserve Bank of India (RBI) barred Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups in any customer accounts, wallets, FASTags and other instruments after 29 February.
The stock slumped 20 per cent to hit lower circuit at Rs 487.20 on the NSE. Share of the fintech major fell 20 per cent on Thursday as well. The company’s market cap eroded by Rs 17,378.41 crore to Rs 30,931.59 crore in just two days.
In a conference call on Thursday, Paytm founder and CEO Vijay Shekhar Sharma said that the RBI’s order to stop almost all services of Paytm Payments Bank is more of a speed bump.
Sharma said that the company will continue to decline and reduce its dependence on its associate bank and will see through by accelerating its partnership with other banks.
The company had already started to work with other banks two years back and will now accelerate the plan to move to other bank partners. "These are payment related relationships which means that all banks have necessary technology and capabilities," the Sharma informed.
"On behalf of Paytm, this is more of a speed bump, but we believe in partnership of the banks and we will be able to see to the same in the next few days," the CEO stated.
Jefferies downgraded Paytm to ‘underperform’ from ‘buy’, cutting the target price to Rs 500 from Rs 1,050 per share. Macquarie also slashed its target price to Rs 650 per share and maintained a ‘neutral’ stance on the stock.
The company estimated Rs 300-500 crore hit on EBITDA annually due to the RBI restrictions.
The central bank on Wednesday directed Paytm Payments Bank to stop accepting deposits or top-ups in any customer accountsprepaid instruments, wallets, and FASTags, among others after February 29, 2024. Till then, customers can add or withdraw money from their Paytm wallet and PPBL account.
The RBI action comes after a comprehensive system audit report and subsequent compliance validation report of external auditors. One97 Communications holds a 49 per cent stake in PPBL but classifies it as an associate of the company and not as a subsidiary.
The nodal accounts of One97 Communications and Paytm Payments Services are to be terminated at the earliest, in any case not later than 29 February 2024.