Paytm shares resume fall as stock tumbles 9% today. Here's why

Shares of One 97 Communications Ltd (Paytm's parent) returned to the negative territory after a single-day halt. The stock dived 8.84 per cent to hit a day low of Rs 773.90. However, it recovered as the session progressed and was last seen trading 2.53 per cent lower at Rs 827.50.

Today's fall in the share price came after it was reported that the fintech company and some others are under investigation by the financial crime agency Enforcement Directorate over a cryptocurrency scam. Bourses BSE and NSE have sought clarification from Paytm over the report.

"The exchange has sought clarification from One 97 Communications Ltd on January 24, 2025, with reference to news quoting 'Paytm, Razorpay, others face probe over crypto scam, ED freezes Rs 500 crore: Report'. The reply is awaited," a BSE filing read.

Paytm, in response, said, "With reference to your emails on the above-mentioned subject and articles published in other media channels on January 24, 2025, we confirm that we have not received any such new notice, communication, or query from the Enforcement Directorate regarding the matter mentioned in the media articles. The information published is factually incorrect and misleading and we had not received any query from the media prior to the publishing of this news article."

"The instances currently being reported by the media pertain to similar old enquiries regarding third-party merchants. We would like to clarify that these merchants are independent entities and are not part of our group. We confirm that we had fully cooperated with the authorities and had complied with all their directives," it also said.

"We would also like to take this opportunity to clarify that contrary to media reports there has been no probe on the Company or its subsidiaries, the ED’s probe is on third-party merchants," Paytm further stated.

On the earnings front, the digital payments firm reported a narrower loss, at Rs 208 crore, in the December 2024 quarter compared to Rs 222 crore in the corresponding quarter last fiscal. Revenue for the quarter fell 36 per cent year-on-year (YoY) to Rs 1,828 crore from Rs 2,850 crore in the year-ago period.

JM Financial said Paytm's track record of robust margin incremental profitability (MIP) to sustain post financial year 2024-25 (FY25). "Paytm reported FY21-24 revenue CAGR of 53 per cent, with the company delivering adjusted EBITDA of Rs 560 crore in FY24 (vs Rs 1,650 crore loss in FY21), implying marginal incremental profitability of 30 per cent. We expect the company's mid-fifties contribution margin to expand further by 500 basis points (bps) in 5 years, driven by take-rates rising across its commission/subscription based revenue income. Hence, post the realignment in FY25, we forecast the company to sustain its MIP track record with FY25-30 MIP at 36 per cent," it stated.

"We value Paytm at 70X FY27E PER (in-line with trading multiples of our consumer internet coverage), resulting in Mar'26 target price of Rs 1,250. We reinitiate 'BUY'," the brokerage added.

"Technically, Paytm recently took support at Rs 790 level, reinforcing the stock's bullish momentum. This correction presents a potential buying opportunity. Paytm is well-positioned to achieve a near-term target of Rs 925, provided it maintains the support level above Rs 750. A break below this critical level would negate the bullish outlook," said Ameya Ranadive, Chartered Market Technician and Senior Technical Analyst at StoxBox.