Paytm slips after payments bank chief quits, BofA resumes coverage with ‘underperform’ rating

Paytm shares fell nearly 3 percent on April 10 after Surinder Chawla stepped down as the Paytm Payments Bank managing director and chief executive citing personal reasons and to explore better career prospects.

Chawla will be relieved from his duties on June 26, the company said in a regulatory filing.

Paytm parent One 97 Communications reiterated in the release that “nearly all agreements between the company and PPBL have been terminated”, and the board of Paytm Payments Bank has been rebuilt with five independent directors, including an independent chairperson, and no nominees from the company.

Founder Vijay Shekhar Sharma resigned from the board of embattled PPBL on February 26 to enable the reconstitution of the board.

At 9:22 am, Paytm shares were trading 2.8 percent lower at Rs 392.90 on the National Stock Exchange (NSE).

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The Paytm fiasco unfolded on January 31, when the RBI imposed major business restrictions on PPBL, including a bar on accepting fresh deposits and doing credit transactions after February 29. On February 16, it extended the deadline to March 15.

A day before the RBI’s ban could come into effect, the National Payments Corporation of India (NPCI) granted approval to Paytm to participate in UPI services as a third-party application provider (TPAP) under the multi-bank model.

Paytm has seen its unified payments interface (UPI) market share drop to 9 percent in March, its lowest level in the last four years, according to data available on the NPCI website. In February, it had dropped to 11 percent from the previous month after the RBI’s crippling restrictions on PPBL. NPCI started sharing UPI apps’ transaction volume and value from April 2020 and this is Paytm’s lowest market share since then.

Bank of America (BofA) has resumed its coverage on the stock with an ‘underperform’ rating and a target price of Rs 400 which is a 1 percent downside from the April 9 closing price of Rs 404.50 on the NSE. Paytm is expected to witness a gradual growth in its lending business, the brokerage said in a review note.

Also Read | Paytm sees new FPIs ramp up investment, domestic investors hike stakes by 1.68%

Despite the turmoil so far this year, Paytm has seen an increase in the shareholding of domestic investors driven by mutual funds in the fourth quarter of the fiscal year. MFs have increased their stake by 1.17 percent to 6.15 percent in Q4FY24, led by investment from Mirae Mutual Fund and Nippon India Mutual Fund.

As a result, domestic institutional investors (DIIs) witnessed an increase in stake to 6.86 percent. Retail investors’ shareholding went up to 14.53 percent sequentially. Meanwhile, foreign portfolio investors’ (FPIs) shareholding rose to 20.19 percent.

The Foreign Direct Investment (FDI) shareholding, however, fell 6 percent to 60 percent.

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