Paytm shares stayed in the green with a 5 percent rise on February 20 after founder and CEO Vijay Shekhar Sharma assured that its QR code and soundbox facilities will continue to work even after the March 15 deadline set by the Reserve Bank of India for the strict restrictions it has slapped on the bank.
“Paytm QR, soundbox and EDC (card machine) will continue to work like always, even after March 15. The latest FAQ issued by RBI on point #21 clarifies it unambiguously. Do not fall for any rumour or let anyone deter you to championing Digital India," Sharma wrote on X (formerly Twitter).
The RBI confirmed that merchants - around 80 percent as per the management - using Paytm QR or soundbox linked to another bank account can continue beyond March 15.
At 9:16am, Paytm shares were trading at the upper circuit at Rs 376 on the National Stock Exchange (NSE). So far this year, the stock has tanked 41 percent.
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Jefferies India has discontinued its rating on Paytm until the “news flow settles down” around the fintech major fighting regulatory actions by the RBI. The brokerage said it has moved to 'not rated' from 'underperform' and now sees a 28 percent on-year decline in FY25 revenues that pushes Paytm into cash burns.
The reason for cutting revenue was factoring direct and indirect impact after the RBI's FAQs reiterate wind-up of PPBL's business (deposit A/Cs, wallets, and so on), but platforms outside PPBL (Paytm app, UPI transfers, merchant payment and loan originations) can continue.
“Still, positive and negative risks arise from user/merchant retention, revenue traction and cost-controls,” Jefferies said in a note.
While Paytm has shifted its nodal account from PPBL to Axis Bank, the move makes its business model similar to that offered by pure payment service providers like PhonePe, GPay, Pine Labs, etc. Jefferies said Paytm shifting focus to retain customers and merchants could lead to it using its Rs 8,500 crore cash reserves.
Jefferies further said regulatory actions are unfolding, awaiting clarity on two key issues: RBI's stance on the transition method for VPA handling of Paytm users and the outcome of Enforcement Directorate investigations. In the medium term, government approval for the payment aggregator license to subsidiary PPSL will be crucial, it added.
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In the previous session, Paytm shares gained 5 percent as the stock hit the upper circuit for the second straight session after the company partnered with Axis Bank for the settlement of merchant payments.
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