Share price of India’s leading payments app moved down by nearly 20 percent to Rs. 609 on Thursday and hit a lower circuit after the company received a notice from the Reserve Bank of India (RBI) on January 31st.
With a market cap of Rs. 38,663 crore, Paytm Payments Bank Limited opened at Rs. 609, compared to its previous close of Rs. 761.20.
The company has delivered negative returns of more than 22.64 percent in the last six months, compared to nearly 16.25 percent of positive returns in the last one year. So far in 2024, it has given around 5.74 percent of negative returns.
According to the recent filings on stock exchanges, RBI ordered Paytm Payments Bank Limited, an associate of One 97 Communications Limited (OCL), to stop accepting fresh deposits or further credit transactions or top-ups in any customer accounts from March 1st.
The company mentioned in the filings that, it expects this action to have a worst-case impact of Rs. 300 to 500 crores on its annual EBITDA going forward, but anticipates continuing on its trajectory to improve its profitability.
Paytm has long been the centre of unfavourable attention, particularly in the last one year, with several major occurrences highlighted below.
February 2023 – Alibaba, a Singapore E-commerce giant offloaded its remaining stake of 2.14 crore shares in the parent company of Paytm, One97 Communications Ltd., at an average price of Rs. 642.74 per share worth nearly Rs. 1,377 crore.
October 2023 – the RBI imposed a monetary penalty of Rs. 5.39 crore on Paytm Payments Bank Ltd. for non-compliance with certain provisions of RBI including failing to monitor payout transactions and carry out risk profiling of entities availing payout services and reporting a cyber security incident with delay.
November 2023 – The Warren Buffet-owned Berkshire Hathaway sold its entire stake in One97 Communications Ltd.
According to the data available on NSE, Berkshire Hathaway sold over 1.56 crore equity shares, through its affiliate BH International Holdings, at an average price of Rs. 877.29 per share, amounting to a total transaction value of Rs. 1,370.63 crore.
In terms of financials, the revenue from operations of One 97 Communications Ltd. increased by 7.97 percent from Rs. 1,980 crore in the September 2023 quarter to Rs. 2,138 crore in the December 2023 quarter.
However, the company witnessed a decrease in the net loss to Rs. 254 crore in the December 2023 quarter from a loss of Rs. 324 crore in the September 2023 quarter.
As of December 2023, FIIs hold 63.72 percent of the shares, whereas DIIs hold 6.07 percent of the shares in the company, aggregating to 69.79 percent of the institutional holdings.
Paytm Payments Bank Ltd. was launched in 2009 and is India’s leading payments app, and over 20 million merchants & businesses are powered by the company to accept payments digitally.
Written by Shivani Singh
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