The share price of One97 Communications, the parent firm of Indian digital payments company Paytm, fell sharply on Monday morning, hitting the new lower circuit breaker, a price band, on the Bombay Stock Exchange.
The company's stock fell by 10 per cent to 438.50 rupees ($5.28), locking at the new lower circuit limit. The shares fell 20 per cent each on Thursday and Friday.
The BSE changed the daily lower circuit breaker of Paytm shares to 10 per cent from 20 per cent earlier after the stock of the FinTech company's shares hit a 20 per cent lower circuit limit for two consecutive sessions following the Reserve Bank of India’s regulatory action against its associate, Paytm Payments Bank Limited on January 31.
The country's central bank on Wednesday ordered PPBL to stop accepting fresh deposits in its accounts or digital wallets from March, saying that it found “persistent non-compliance and continued material supervisory concerns in the bank”.
Investors and market intermediaries fear that the latest regulatory action could seriously impair Paytm's business volumes and profitability.
In three straight trading sessions, following the RBI action, the company lost 205 billion rupees, or 42.4 per cent, in market capitalisation.
India's central bank has ordered PPBL to halt most of its business including taking further deposits, conducting credit transactions and carrying out top-ups on any customer accounts, prepaid instruments, wallets, and cards for paying road tolls after February 29.
Following the RBI action last week, several media reports have claimed that the company and its chief executive Vijay Shekhar Sharma are being investigated by the Enforcement Directorate, India’s federal investigating agency for financial crimes, for alleged money laundering.
However, Paytm, in a stock exchange filing, has categorically denied any such investigation by the ED.
“Neither the company nor its founder and chief executive are being investigated by the Enforcement Directorate regarding money laundering,” the company said.
What is next for Paytm?
One97 Communications holds a 49 per cent stake in PPBL but classifies it as an associate of the company and not as a subsidiary. Paytm founder and chairman Vijay Shekhar Sharma has a 51 per cent stake.
As per the RBI directive, customers will not be able to make deposits or add money to the Paytm Payments Bank savings, current account, debit card, Paytm wallet and the road toll payment system after February 29, 2024.
However, there is no restriction on the withdrawal of money from the existing balance even after February 29.
PPBL is staring at an uncertain future with the RBI’s decision to bar fresh deposits and top-ups and One97 Communications, which runs Paytm services, stopping all businesses with PPBL.
Paytm's management claims, that despite the restrictions on PPBL, the company will continue to operate its wallet and payments business by establishing new banking relations.
The company said the continuation of the existing business is about making sure that the people who had set up their mandates from the PPBL bank account switch to another bank account, for which work has already started.
“I think the disruption will be there for a couple of weeks. And to that extent, we will have an ebitda [earnings before interest, taxes, depreciation and amortisation] impact on our lending business. I don’t want to shy from saying that,” Paytm president and chief operating officer Bhavesh Gupta said.
In an attempt to calm the nerves of its app users and investors, Mr Sharma said in a post on X (formerly Twitter) on Friday: “Your favourite app is working, will keep working beyond 29 February as usual … For every challenge, there is a solution, and we are sincerely committed to serving our customers.”
Uncertainty weighs on shares
Despite the assurances by the management on resolving the current crisis, investors, market intermediaries and customers seem far from convinced.
Stock broker firm Jefferies said there was no clarity on RBI's actions after the company’s analysts call and added that the recent events would drag the company’s growth and elongate profitability timelines.
“RBI’s actions directly impact the wallet business and profitability of merchant payments business, which can impact ebitda by 20 per cent to 30 per cent. We see the impact being much larger due to reputational concerns around the group,” it said.
With uncertainty on its future, analysts said PPBL is likely to witness a decline in deposits and business following the RBI curbs.
Jefferies has downgraded the share to 'underperform' and cut its target price to 500 rupees per share.
“We cut ebitda by 46 per cent in 2025-26, led by a 7 per cent to 10 per cent cut to payments revenue and a 17 per cent to 24 per cent cut in lending revenue and compression in payments margins,” it said.
Stock brokers Macquarie said the implications of the RBI ban are quite serious but maintained its “neutral” rating on the stock and a target price of 650 rupees.
“Given the severe restrictions imposed on PPBL, we believe it significantly hampers Paytm’s ability to retain customers in its ecosystem,” Macquarie’s managing director Suresh Ganapathy said.
“We think revenue and profitability implications in the medium to long term could be significant and remain a key item to monitor.”
Indian stock broking company Motilal Oswal said it is having a “watchful stance” on the resilience of Paytm's business model. It suggested a target of 575 rupees on Paytm.
Analysts say the current crisis is also likely to hurt the market share of Paytm.
As per the latest available data from the National Payments Corporation of India, as of December 2023, PhonePe had a 46 per cent share in digital payment volumes, followed by Google Pay with 36 per cent and PPBL with 13 per cent.
Paytm's $2.5 billion initial public offering on the BSE in November 2021 was touted as a bellwether that the South Asian country's appeal to global capital was growing. However, the company lost over a quarter of its value on its trading debut.
The unprofitable company’s market value has fallen to about $3.4 billion – down about 80 per cent from its stock market listing.
Scores
Wales 74-24 Tonga
England 35-15 Japan
Italy 7-26 Australia
Killing of Qassem Suleimani
Six large-scale objects on show
- Concrete wall and windows from the now demolished Robin Hood Gardens housing estate in Poplar
- The 17th Century Agra Colonnade, from the bathhouse of the fort of Agra in India
- A stagecloth for The Ballet Russes that is 10m high – the largest Picasso in the world
- Frank Lloyd Wright’s 1930s Kaufmann Office
- A full-scale Frankfurt Kitchen designed by Margarete Schütte-Lihotzky, which transformed kitchen design in the 20th century
- Torrijos Palace dome
Killing of Qassem Suleimani
The five pillars of Islam
SPECS
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Prop idols
Girls full-contact rugby may be in its infancy in the Middle East, but there are already a number of role models for players to look up to.
Sophie Shams (Dubai Exiles mini, England sevens international)
An Emirati student who is blazing a trail in rugby. She first learnt the game at Dubai Exiles and captained her JESS Primary school team. After going to study geophysics at university in the UK, she scored a sensational try in a cup final at Twickenham. She has played for England sevens, and is now contracted to top Premiership club Saracens.
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Seren Gough-Walters (Sharjah Wanderers mini, Wales rugby league international)
Few players anywhere will have taken a more circuitous route to playing rugby on Sky Sports. Gough-Walters was born in Al Wasl Hospital in Dubai, raised in Sharjah, did not take up rugby seriously till she was 15, has a master’s in global governance and ethics, and once worked as an immigration officer at the British Embassy in Abu Dhabi. In the summer of 2021 she played for Wales against England in rugby league, in a match that was broadcast live on TV.
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Erin King (Dubai Hurricanes mini, Ireland sevens international)
Aged five, Australia-born King went to Dubai Hurricanes training at The Sevens with her brothers. She immediately struck up a deep affection for rugby. She returned to the city at the end of last year to play at the Dubai Rugby Sevens in the colours of Ireland in the Women’s World Series tournament on Pitch 1.
KILLING OF QASSEM SULEIMANI
Killing of Qassem Suleimani
Israel Palestine on Swedish TV 1958-1989
Director: Goran Hugo Olsson
Rating: 5/5
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Suggested picnic spots
Abu Dhabi
Umm Al Emarat Park
Yas Gateway Park
Delma Park
Al Bateen beach
Saadiyaat beach
The Corniche
Zayed Sports City
Dubai
Kite Beach
Zabeel Park
Al Nahda Pond Park
Mushrif Park
Safa Park
Al Mamzar Beach Park
Al Qudrah Lakes
The five pillars of Islam
The%20specs
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Jetour T1 specs
Engine: 2-litre turbocharged
Power: 254hp
Torque: 390Nm
Price: From Dh126,000
Available: Now
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11 cabbie-recommended restaurants and dishes to try in Abu Dhabi
Iqbal Restaurant behind Wendy’s on Hamdan Street for the chicken karahi (Dh14)
Pathemari in Navy Gate for prawn biryani (from Dh12 to Dh35)
Abu Al Nasar near Abu Dhabi Mall, for biryani (from Dh12 to Dh20)
Bonna Annee at Navy Gate for Ethiopian food (the Bonna Annee special costs Dh42 and comes with a mix of six house stews – key wet, minchet abesh, kekel, meser be sega, tibs fir fir and shiro).
Al Habasha in Tanker Mai for Ethiopian food (tibs, a hearty stew with meat, is a popular dish; here it costs Dh36.75 for lamb and beef versions)
Himalayan Restaurant in Mussaffa for Nepalese (the momos and chowmein noodles are best-selling items, and go for between Dh14 and Dh20)
Makalu in Mussaffa for Nepalese (get the chicken curry or chicken fry for Dh11)
Al Shaheen Cafeteria near Guardian Towers for a quick morning bite, especially the egg sandwich in paratha (Dh3.50)
Pinky Food Restaurant in Tanker Mai for tilapia
Tasty Zone for Nepalese-style noodles (Dh15)
Ibrahimi for Pakistani food (a quarter chicken tikka with roti costs Dh16)
The years Ramadan fell in May
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UAE currency: the story behind the money in your pockets
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Election pledges on migration
CDU: "Now is the time to control the German borders and enforce strict border rejections"
SPD: "Border closures and blanket rejections at internal borders contradict the spirit of a common area of freedom"
Thor: Ragnarok
Dir: Taika Waititi
Starring: Chris Hemsworth, Tom Hiddleston, Cate Blanchett, Jeff Goldblum, Mark Ruffalo, Tessa Thompson
Four stars
SPECS
Nissan 370z Nismo
Engine: 3.7-litre V6
Transmission: seven-speed automatic
Power: 363hp
Torque: 560Nm
Price: Dh184,500
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BABYLON
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SOUTH%20KOREA%20SQUAD
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Countries offering golden visas
UK
Innovator Founder Visa is aimed at those who can demonstrate relevant experience in business and sufficient investment funds to set up and scale up a new business in the UK. It offers permanent residence after three years.
Germany
Investing or establishing a business in Germany offers you a residence permit, which eventually leads to citizenship. The investment must meet an economic need and you have to have lived in Germany for five years to become a citizen.
Italy
The scheme is designed for foreign investors committed to making a significant contribution to the economy. Requires a minimum investment of €250,000 which can rise to €2 million.
Switzerland
Residence Programme offers residence to applicants and their families through economic contributions. The applicant must agree to pay an annual lump sum in tax.
Canada
Start-Up Visa Programme allows foreign entrepreneurs the opportunity to create a business in Canada and apply for permanent residence.
Zayed Sustainability Prize
Most sought after workplace benefits in the UAE
- Flexible work arrangements
- Pension support
- Mental well-being assistance
- Insurance coverage for optical, dental, alternative medicine, cancer screening
- Financial well-being incentives
Mohammed bin Zayed Majlis
Mohammed bin Zayed Majlis
The biog
Favourite films: Casablanca and Lawrence of Arabia
Favourite books: Start with Why by Simon Sinek and Good to be Great by Jim Collins
Favourite dish: Grilled fish
Inspiration: Sheikh Zayed's visionary leadership taught me to embrace new challenges.
