In a remarkable streak, Paytm's shares surged for the fourth consecutive trading session, with an opening spike of 5% on Wednesday, propelling the stock to touch the upper circuit at INR 395.25 on the BSE, edging closer to the INR 400 mark.
Recovery Amid Regulatory Challenges
After enduring a steep decline of over 50% since January 31, triggered by regulatory actions against Paytm Payments Bank by the Reserve Bank of India (RBI), the company's shares found relief towards the end of last week. The RBI's extension of the deadline for business restrictions on the payments bank to March 15, coupled with Paytm's strategic move to shift its nodal account to Axis Bank, injected optimism among shareholders.
Positive Momentum and Investor Sentiment
Buoyed by these developments, Paytm shares have witnessed a robust uptick of 21.5% since Friday (February 16), indicating a resurgence in investor confidence amidst regulatory uncertainties.
Brokerage Insights and Market Outlook
Despite initial apprehensions and downgrades by several brokerages, the regulatory landscape surrounding Paytm is gradually viewed with optimism post the RBI's clarifications and deadline extension. Bernstein, maintaining an 'outperform' rating with a PT of INR 600, emphasized Paytm's resilient merchant base and minimized long-term impacts from regulatory actions.
Assessing the Impact and Future Trajectory
While acknowledging short-term disruptions in payment GMV and processing margins, Bernstein remains bullish on Paytm's long-term prospects, attributing any potential setbacks to Paytm Payments Bank's products phase-out. However, Jefferies remains cautious, suspending its rating and PT until regulatory uncertainties subside, projecting a YoY revenue decline for FY25.
Enforcement Directorate's Probe
Amidst the regulatory scrutiny, reports surfaced suggesting that the Enforcement Directorate (ED) found no evidence of foreign exchange violations in Paytm Payments Bank, offering some reprieve amidst ongoing investigations.
In a landscape marked by regulatory challenges and market volatility, Paytm's resilience and strategic maneuvers underscore its determination to navigate turbulent waters and emerge stronger in the evolving fintech ecosystem.
