Paytm Stock Crashes: Down 42% in 3 Days, Hits New Low

Paytm Stock Crashes Amid RBI Curbs and Crisis Management Efforts

Steep Decline in Paytm Stock Continues:

Paytm Stock Crashes, A 10 percent fall was witnessed in Paytm stock on February 5, hitting the lower circuit and marking an over 42 percent decline in the last three sessions. Since the RBI imposed curbs on its payments bank unit, Paytm stock has consistently hit lower circuits, plummeting from Rs 761.4 to Rs 438.5 by Monday morning.

RBI Imposes Restrictions on Paytm’s Payments Bank:

Last week, sweeping curbs were placed by the Reserve Bank of India on One97 Communications’ payments bank operations. These included prohibitions against accepting new deposits and executing credit transactions post-February 29. In response, target prices and stock ratings for Paytm were significantly reduced by brokerages beacuse of Paytm Stock Crashes, with Jefferies adjusting its target to Rs 500 and Macquarie to Rs 650.

Crisis Management and Denial of ED Investigation:

Over the weekend, Paytm entered crisis management mode, aiming to mitigate the impact of ongoing negative news. Any investigation by the Enforcement Directorate (ED) concerning anti-money laundering activities was categorically denied by the company, in light of rumours suggesting a potential probe.

RBI’s Further Actions and Analyst Perspectives:

Speculation arose that the Reserve Bank of India might contemplate the cancellation of Paytm’s banking license as soon as next month, pending the security of depositor funds. The halt of most banking operations by the regulator followed repeated warnings over the past two years regarding transactions between its payment app and banking unit. An underperform rating with a target price of Rs 500 per share was assigned to the stock by analysts at Jefferies on February 2, citing that recent events could hinder the company’s growth and delay profitability milestones.

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