Paytm gains 5% on partnership with Axis Bank, RBI's deadline extension

Brokers said that many HNIs and small investors have heavily bought into Paytm as a trading bet

Paytm shares gained 5 percent to hit the upper circuit for the second straight session on February 19 after the crisis-ridden company partnered with Axis Bank for the settlement of merchant payments. At 9:16 am, the stock was trading at Rs 358.35 on the NSE.

One97 Communications has shifted its nodal account to Axis Bank through an escrow account that it has opened with it. The parent company of Paytm, Paytm QR, Soundbox, and card machines, will continue to operate for all its merchant partners, the company said in a released.

The announcement came after the Reserve Bank of India (RBI) extended the deadline to halt operations and for Paytm Payments Bank account holders, both customers and merchants, to move their assets and look for alternative banks till March 15.

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The central bank also issued a list of frequently asked questions (FAQs) for all Paytm Payments Bank account holders. The FAQs include clarifications regarding remaining balance, UPI payments and FASTag on vehicles.

Citi has a "sell" call on the Paytm stock with a target price of Rs 500 a share. According to the brokerage, the FAQs provided by the RBI do not directly address bank partnerships with Paytm.

Despite of shift of Paytm Nodal Account for the settlement of merchant transactions to Axis Bank and the deadline extension, business operations for quarters or devices linked to non-Paytm Payment Bank accounts remain unaffected, Citi said.

It noted that Paytm earlier estimated that 10-15 percent of its merchant base use PPBL accounts. "Now, merchants will have to link another account or get new quarter/non-PPBL accounts," it said.

Jefferies India has dropped its rating on Paytm until the “news flow settles down” around the fintech major. The brokerage said it has moved to "not rated" from "underperform" and now sees a 28 percent YoY decline in FY25E revenues that pushes Paytm into cash burns.

Also Read | Paytm shares could rally some more on Monday, but big upside unlikely

In the previous session, Paytm shares ended at 5 percent upper circuit at Rs 341.30 on the National Stock Exchange (NSE). The stock has tanked 55 percent in just the last one month.

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