Paytm share price hits 5% upper circuit as it moves nodal account to Axis Bank
Paytm share price surged by 5 per cent to hit its upper circuit in opening deals after shifting the nodal account to Axis Bank. RBI extended Paytm Payments Bank deadline to March 15, from the initial date of February 29.
Paytm share price jumped 5 per cent to hit the upper circuit of ₹358.55 in opening deals on Monday, February 19, after its parent firm One97 Communications announced on Friday that Paytm has shifted its nodal account to Axis Bank (by opening an Escrow Account).
A modification in the nodal account setup will enable merchants to sustain their acceptance of digital payments through the Paytm QR code or card machine. This adjustment aims to alleviate concerns regarding potential suspensions of merchant payments.
Moreover, on Friday, the Reserve Bank of India announced an extension of the deadline for Paytm Payments Bank until March 15, a shift from the initial date of February 29. This extension applies to certain restrictions imposed on January 31.
The Reserve Bank of India (RBI) on Friday extended by 15 days the deadline for stopping deposit transactions at Paytm Payments Bank, part of One 97 Communications that runs the digital payments firm Paytm. Customers now have time till 15 March to deposit money into their accounts, wallets, FASTags, and prepaid cards.
This means customers can continue to use, withdraw and transfer funds from their accounts. However, after March 15, 2024, customers will not be able to deposit money into their accounts with Paytm Payments Bank.
Meanwhile, brokerage firm Bernstein has assigned an 'outperform' rating to Paytm, along with a target price of ₹600 per share.
As per the brokerage, the Reserve Bank of India's (RBI) actions are directed primarily at Paytm Payments Bank (PPBL), with no intention to disrupt other integral functions of Paytm. This distinction is crucial in understanding the scope of regulatory measures impacting the company.
Paytm share price jumped 5 per cent in the previous session too.
The stock, however, has seen strong selling pressure this month after the RBI's action against Paytm Payments Bank. At the current market price of ₹358.55, the stock is down 53 per cent in February so far.
On the other hand, according to a Bloomberg report, Jefferies Financial Group Inc. has become the first major foreign brokerage to drop coverage on One 97 Communications until the news flow around it settles down. The investment bank has moved the stock to 'not rated', weeks after lowering it to underperform.
“Without a banking license, Paytm’s business model will now become similar to pure payment service providers. Paytm’s focus will now move to ensuring customer retention, and we believe it will dip into its 85 billion rupees ($1 billion) cash reserves for spends on retaining users,” analysts Jayant Kharote and Prakhar Sharma wrote in a February 18 note, according to Bloomberg.
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