Paytm Shares Hit 20% Lower Circuit For 2nd Day, Near Record Low Levels; CEO Assures Users

Shares of the digital payments giant are facing another blow as they hit a 20% lower circuit for the second consecutive day, bringing the stock to Rs 487 per share and inching closer to its all-time low of Rs 438 per share witnessed in March 2022. The company's founder, Vijay Shekhar Sharma, addressed concerns during an analyst call following regulatory actions from the Reserve Bank of India (RBI), terming the recent challenges as a "speed bump."

The downward spiral intensified after Jefferies became the first brokerage to downgrade Paytm, triggering a cascade of additional downgrades from various analysts. JPMorgan downgraded the stock to Underweight, citing risks to profit pool, competitive disadvantage, and growing regulatory concerns. The brokerage slashed its price target from Rs 900 to Rs 600 per share. Similarly, CLSA adjusted its price target to Rs 750 from Rs 960 per share but maintained a buy recommendation, cautioning about potential near-term volatility in the stock price.

Out of the 15 analysts covering Paytm, the sentiment has shifted, with four now holding a 'sell' rating, while seven maintain a 'buy' recommendation. The shares have plummeted to 75% below their IPO price of Rs 2,150 per share, reflecting the market's growing scepticism about Paytm's future performance.

One97 Communications Ltd, the parent company of Paytm, released a statement expecting a 'worst case impact' of Rs 300 crore to Rs 500 crore on its annual Earnings before Interest, Tax, Depreciation and Amortisation (EBITDA) due to the RBI's directives on Paytm Payments Bank.

For the December quarter, Paytm reported an EBITDA of Rs 219 crore, with a narrowed net loss of Rs ₹221.8 crore compared to Rs 392.1 crore in the previous year. The company emphasized its commitment to complying with the RBI's directions, assuring stakeholders that Paytm Payments Bank is taking immediate steps to address concerns.

In the face of ongoing challenges, founder and CEO Vijay Shekhar Sharma took to social media platform X (former Twitter) to express gratitude and assurance to Paytm users. In a statement on the platform formerly known as Twitter, Sharma conveyed a message of resilience and commitment, reassuring Paytm users about the continuity of their services beyond February 29.

The founder's message read, "..., Your favourite app is working, and will keep working beyond 29 February as usual. I, with every Paytm team member, salute you for your relentless support. For every challenge, there is a solution, and we are sincerely committed to serving our nation in full compliance. India will keep winning global accolades in payment innovation and inclusion in financial services - with PaytmKaro as the biggest champion of it."