42% fall in Paytm scrip wipes out Rs 20,471-cr mcap

Mumbai: Paytm co-founder Vijay Shekhar Sharma and officials of Paytm reportedly called on the officials at RBI head office in the city on February 5. Though, the details of the meetings are not yet out, it is believed that the meeting will bring positive result for the company.

As a result, the share prices of Paytm first got corrected in the intra-day market on Tuesday, and then started going up.

Shares of One97 Communications Ltd, which owns Paytm brand, rebounded on Tuesday after three days of sharp fall. The stock jumped 7.79 per cent to Rs472.50 during the day on the BSE despite a weak beginning to the trade. It ended at Rs451.60 apiece, reflecting a gain of 3.02 per cent. Shares of the company climbed 7.99 per cent to Rs473.55 during the day on the NSE and ended at Rs452.80 each, up 3.26 per cent. Recovery in the stock added Rs852.78 crore to its market capitalisation (mcap), which stood at Rs28,680.23 crore. In the past three days, the company’s stock tumbled over 42 per cent, wiping out Rs20,471.25 crore from its market valuation, following the RBI’s crackdown. The share lost as much as 20 per cent each day for the last two days.

While the business of Paytm and its use as a payment facilitator is not impacted, it needs to shift balances and appoint new payments bank at the earliest within the current month of February, experts say.

However, talking to Bizz Buzz, Arun Kejriwal, a market expert, said, “I believe as soon as the investors start realising the ground reality, the Paytm share will begin to consolidate in the ongoing week itself.”

Meanwhile, HDFC Bank is “talking” to its longstanding partner Paytm as the fintech tries to find a way out of the current restrictions placed by RBI, a senior executive at the largest private sector lender said on Tuesday.

Stressing that the bank would have been conversing with the fintech even otherwise given its partnership in the acceptance and aggregator space, HDFC Bank’s Country Head for Payments Parag Rao said it is in a “wait and watch” mode, according to agency reports.

Rao was replying to a question on reports about Paytm reaching out to large banks for support. “Paytm has been a partner over the years for our acceptance business, for our aggregator business. Under the current circumstances, we don’t know too much about what is happening but we are talking, we are waiting and watching to see how events develop. That is all I can say right now,” Rao said.

At an event to launch a new credit card proposition for small businesses in Mumbai, he also said that ever since RBI placed severe restrictions on Paytm, there has been a “significant increase” in the traction witnessed by HDFC Bank for its payments app and also merchant business. Every “upheaval” in the market which impacts a rival opens up opportunities for other participants as the smart customers realign themselves, Rao said, adding that there is traction for Fastag, prepaid card offerings and sound boxes as well.

Rao made it clear that HDFC Bank’s partnership with Paytm is with the parent entity One97 Communications, and not with the Paytm Payments Bank, which is under regulatory scrutiny.