Paytm stock erases early losses; rises 5% to hit upper circuit

In the last five trading sessions, Paytm shares have tanked 23 percent, eroding investors' wealth.

Paytm shares recovered from the record low of Rs 318.05, hit earlier in the day, to trade at 5 percent upper circuit of 5 percent in afternoon trade on February 16. At 1:17 pm, the stock was trading at Rs 341.30 on the National Stock Exchange (NSE).

The rise comes even after the Enforcement Directorate reportedly questioned Paytm company executives and took submission of documents from them following the recent RBI action of barring Paytm Payments Bank Ltd (PPBL) from accepting deposits or top-ups in any customer account.

In the previous session, shares of the troubled fintech hit a 5 percent lower circuit. In the last five trading sessions, the Paytm shares have tanked 23 percent, eroding investors' wealth.

Paytm has lost about Rs 27,000 crore or 57 percent of its value in the last 11 trading days since the trouble began after the RBI crackdown on the Paytm Payments Bank which also houses Paytm Wallet over "persistent non-compliances and continued material supervisory concerns".

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The regulator found major irregularities in KYC, which exposed the customers, depositors, and wallet holders to serious risks. It found that in thousands of cases, the same PAN was linked to more than 100 customers and, in some cases, the number went above 1,000.

The total value of transactions, running into crores of rupees, is much beyond the regulatory limits in minimum KYC pre-paid instruments, raising money-laundering concerns.

According to Sandeep Tandon of Quant MF, an "unknown risk" has hit Paytm, which has set the stock on a sustained downturn, and eroding its market capitalisation. "Looking at Paytm as a concept, I don't find too many problems at the current levels. But there is a regulatory risk," Tandon told CNBC-TV18 in an interview.

According to the veteran investor, since the Paytm stock is grossly over-owned by private equity who are exiting at every level, it leads to increased selling pressure on the stock.

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