In a significant blow to digital payments giant Paytm, the shares of its parent company, One97 Communications Limited, have plummeted by 10% for the second consecutive day, hitting a record low of Rs 342.15. The latest setback comes on the heels of the Enforcement Directorate (ED) filing a case against Paytm Payments Bank under the Foreign Exchange Management Act (FEMA).
Investors, already jittery due to the Reserve Bank of India’s (RBI) recent regulatory action against Paytm Payments Bank, were further rattled by the news of the fresh ED probe. The RBI’s directive, which ordered the payments bank to halt key operations from March 1, resulted in a significant dip in Paytm’s share price, creating panic among users and investors alike.
Despite multiple clarifications from Paytm, analysts remain skeptical, with global brokerage firm Macquarie downgrading the stock’s rating to ‘underperform’ and reducing the target price to Rs 275 per share. The decision was based on the company’s substantial decline in revenues across various segments.
Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, noted that Paytm stock is currently trading below significant exponential averages, signaling a prevailing bearish sentiment. Patel advised investors to avoid the stock and consider exiting positions if there is an upward movement in its price.
Market expert AK Prabhakar echoed the caution, emphasizing losses at the company and the recent RBI action. He said, “As a retail investor, I will stay away.”
As Paytm faces increasing scrutiny and challenges, investors are left wondering if more trouble lies ahead for the once-prominent digital payments player.
