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Business News/ Markets / Stock Markets/  Why Paytm share price may open lower on the Budget 2024 date?
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Why Paytm share price may open lower on the Budget 2024 date?

Paytm share price has crucial support placed at ₹700 and ₹590 apiece levels, say experts

RBI's restrictions on Paytm's payment bank would impact the lending business of the fintech company, believe experts. (Photo: Bloomberg)Premium
RBI's restrictions on Paytm's payment bank would impact the lending business of the fintech company, believe experts. (Photo: Bloomberg)

Paytm share price: In a strong statement on Wednesday, the Reserve Bank of India (RBI) imposed restrictions on Paytm's payment bank due to non-compliance. This is expected to impact the lending business of Paytm, which generated around 20 percent of the net revenue of the fintech company. So, the Indian stock market is expected to react to this new development and hence some market experts are expecting some selling pressure in Paytm shares during the early morning session on the Budget 2024 date.

Expecting weakness in Paytm shares during the opening bell today, Avinash Gorakshkar, Head of Research at Profitmart Securities said, "The RBI has imposed restrictions on the Paytm's payment bank due to non-compliance. This RBI restriction is going to impact the lending business of Paytm. As Paytm generates around one-fifth of its revenue from the lending business, the market is expected to discount the Paytm share price after this development."

On how this RBI move will impact Paytm's business, Jefferies said, "Key impact can be on lending business (+20% of revenues) if lending partners limit business due to operational/ governance risks. Also: a) wallet GMV (5% of total) may need to be wound down; b) merchants using Paytm Bank (6% of devices) may be impacted; c) Fastag GMV will be majorly affected. This can be a key risk to earnings/ valuations & we await details from management."

"The payment bank houses all 330 mn+ wallet accounts. Given the fact that the current MTU (monthly transacting users) for Paytm is 100 mn and the earlier ban was for onboarding new customers, Paytm could continue leveraging PBPLs customer base for selling payments and financial products. Existing customers are prohibited from carrying out basic banking operations like credit, deposits, fund transfers, UPI transactions, FASTag toll payments (where Paytm has ~17% market share and ~60mn users), bill payments, and use wallets. Given the severe restrictions imposed on PBPL, we believe it significantly hampers Paytm's ability to retain customers in its ecosystem, and accordingly restricts it from selling payment products and loan products. We think revenue and profitability implications in the medium to long term could be significant and remain a key item to monitor," Macquarie report said.

Paytm shares: Important levels to look at

As per the technical analysts, Paytm share price has crucial support placed at 700 and 590 apiece levels whereas Paytm shares are facing a hurdle at 810 and 890 apiece levels.

Paytm news

The RBI on January 31 imposed restrictions on Paytm Payments Bank Ltd (PPBL), following a system audit report and subsequent compliance validation report of external auditors.

PPBL is barred from accepting deposits or top-ups in any customer account, wallets or FASTags after February 29 under section 35A of the Banking Regulation Act, 1949.

Disclaimer: The views and recommendations above are those of individual analysts, experts, and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decisions.

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ABOUT THE AUTHOR
Asit Manohar
Chief Content Producer at Live Mint Digital Team
Catch all the Business News, Market News, Breaking News Events and Latest News Updates on Live Mint. Download The Mint News App to get Daily Market Updates.
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Published: 01 Feb 2024, 08:10 AM IST
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