Over the last several trading sessions, shares of One 97 Communications, the parent company of Paytm, have routinely reached upper circuit limits. After four days of a 5% surge, the stock locked at a 5% upper circuit limit today, at ₹395 per share. The stock has increased by 21% in the last four days.
The following variables may be causing Paytm’s share price to soar:
RBI’s extension of the deadline
Paytm Payments Bank (PPBL) has been given an extra 15 days, till March 15, by the Reserve Bank of India (RBI), to complete deposits, credit transactions, or top-ups.
The Axis Bank ruling for Paytm
Paytm said that its nodal account would be moving to Axis Bank, raising concerns about possible interruptions to merchant payments. This implies that businesses will be able to continue accepting digital payments via the Paytm card reader or QR code. However, users will be unable to make deposits into their Paytm Payments Bank accounts after March 15. According to Paytm, users are free to keep utilising, withdrawing, and transferring money.
The CEO of Paytm’s message
The CEO and creator of Paytm, Vijay Shekhar Sharma, promised consumers that the Paytm card systems, Soundbox, and QR codes would still work after March 15.
Bernstein’s assessment of Paytm
With a target price of ₹600 per share, Bernstein rated Paytm as “outperform,” noting that the RBI’s actions target Paytm Payments Bank (PPBL) and won’t affect the company’s other operations. Meanwhile, global brokerage firm Jefferies halted coverage of Paytm until there is greater stability.
