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Business News/ Markets / Stock Markets/  Paytm shares down 5% after rising for two consecutive days

Paytm shares down 5% after rising for two consecutive days

The scrip declined today after hitting 5 percent upper circuit for two consecutive trading sessions.

Paytm REUTERS/Dado Ruvic/Illustration/File Photo/File Photo (REUTERS)Premium
Paytm REUTERS/Dado Ruvic/Illustration/File Photo/File Photo (REUTERS)

Paytm share price witnessed a 5% decline, reaching its lower circuit at 406.1. Despite Vijay Shekhar Sharma's resignation as part-time non-executive chairman and board member at Paytm Payments Bank, investors remained unsettled.

The scrip declined today after hitting 5 percent upper circuit for two consecutive trading sessions. 

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“Paytm will likely experience near-term financial impact on its business along with some permanent loss of business in FY25E," global brokerage firm UBS was quoted as saying by The Economic Times.

"We expect Paytm to lose 5-7ppt of its 25% share in the payments industry, driven by loss of wallet (2-3ppt permanent loss) and the rest due to merchant/customer churn. We estimate net payments margin to decline to 6-7bp range from 7-9bp range, given loss of high-margin wallet business and likely easier terms to retain merchants," it said.

UBS reaffirmed its ‘Neutral’ rating on Paytm while revising down its target price from 650 to 510.

It further added, "Loan origination will likely be paused for most of Q4 and then only pick up post stabilisation of payments business in FY25E. We forecast loan disbursements to decline 14% YoY in FY25E. We model a smaller 18% decline in cloud and commerce in Q4 given less direct impact and 18% YoY growth in FY25E."

Also read: Zee Entertainment share price down 5%: Independent Advisory committee role expansion fails to lift investor confidence

Earlier this week, One 97 announced the reconstitution of the board of directors of its associate entity, Paytm Payments Bank. The newly appointed board members include Ex-Central Bank of India Chairman Srinivasan Sridhar, retired IAS officer Debendranath Sarangi, former Executive Director of Bank of Baroda Ashok Kumar Garg, and Retd. IAS Rajni Sekhri Sibal. These individuals have recently assumed their roles as Independent Directors.

"OCL supports PPBL’s move of opting for a board with only independent and executive directors by removing its nominee. The Company has been separately informed that Vijay Shekhar Sharma has also resigned from the Board of Paytm Payments Bank to enable this transition. PPBL has informed us that they will commence the process of appointing a new Chairman," OCL said in a statement.

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Published: 28 Feb 2024, 05:00 PM IST
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