Paytm stock fell another 10 percent, again hitting the lower circuit on February 5, extending fall to over 42 percent in the last three sessions. Paytm stock has hit back-to-back lower circuits since RBI curbs on its payments bank unit, and has fallen from Rs 761.4 to Rs 438.5 as on Monday morning.
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Earlier last week, the Reserve Bank of India imposed sweeping curbs on One97 Communications’ payments bank business, including restrictions against accepting new deposits and carrying out credit transactions after February 29. Brokerages sharply cut Paytm stock ratings and target prices -- Jefferies cut the target price to Rs 500; Macquarie cut it to Rs 650.
Over the weekend, Paytm was in a crisis management mode, trying to contain the fallout from more negative news flowing in. The company has denied facing any investigation from the Enforcement Directorate (ED), after reports that a probe may be initiated if charges related to money laundering are found.
Also read: SBI chairman says no communication with Paytm on transfer of business
The company "categorically denies any investigation by the Enforcement Directorate on OCL (One97 Communications Ltd), our associates and/or its Founder and CEO for anti-money laundering activities", the fintech major said in a regulatory filing.
News reports also said the Reserve Bank of India may consider cancelling Paytm’s banking licence, as early as next month, once the depositors money is safe. The banking regulator halted most of the firm’s banking business after multiple warnings over the past two years on dealings between its payments app and banking unit. On February 2, analysts at Jefferies had given the stock an underperform call with a target price of Rs 500 per share. "We believe recent events will drag company's growth and elongate profitability timelines," the report added.
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