Paytm shares: After 20% plunge, will the stock fall further?

One 97 Communications Ltd (Paytm) shares will be in focus on Friday morning after getting locked at 20 per cent lower circuit limit in the previous session following the Reserve Bank of India (RBI) restrictions on its payments bank, which the Vijay Shekhar Sharma-led company suggested could have a worst case annual Ebitda impact of Rs 300-500 crore. Paytm hosted a conference call on Thursday to update participants on Paytm Payments Bank Limited.

Paytm said its marketing and financial services business are not affected due to directions towards associate company PPBL but there will be requirement to have some operational changes, for which the work has started wherever customers or merchants have relationship with PPBL.

Paytm stock update: Paytm shares plunge 20%, now below Rs 500. What analysts say
 

Paytm said it would completely move to other bank partners, and not with PPBL. It added that the company is taking immediate steps to comply with the RBI directions.

JPMorgan has cut its target on the stock to Rs 600 from Rs 900 and said the order is not the end of the road for Paytm and that it materially impacts near term growth, ET NOW reported.  Jefferies earlier suggested a target of Rs 500 on the stock.

In a note on Paytm, Motilal Oswal Securities said it remains watchful of Paytm's business model and its ability to navigate through this highly uncertain regulatory and macro environment. The brokerage has downgraded its rating on the stock to 'Neutral' with revised target of Rs 575.

"Paytm has recently announced its plan to downsize its BNPL operations and was working to mitigate the impact by scaling up higher-ticket Personal and Merchant loans. Against this backdrop, the latest measures raise serious concerns over its business outlook and dent overall investor confidence," Motilal Oswal said.

YES Securities said it never assigned a 'BUY' rating on Paytm since listing when it had assigned a 'Sell' rating on it. "We, currently, have a less-than-bullish ADD rating on the stock," it said.

Also read: Paytm shares: Macquarie says RBI ban implications quite serious, near term solution unlikely
 

Also read: Paytm shares: Jefferies says RBI restriction to have collateral impact on lending biz, cites risk to earnings, valuations

 

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