Paytm shares plummet another 20%; here’s what Vijay Shekhar Sharma said

Paytm's shares faced a significant setback today, plunging another 20% to hit the lower circuit, following the Reserve Bank of India's (RBI) imposition of restrictions on Paytm Payment Bank. Paytm Shares have fallen nearly 40% in the last two days.

Overall the stock has experienced a 51% decline from its peak of ₹998.30 in October last year. The decrease is attributed to Paytm's projection of an annual Ebitda impact ranging from ₹300 to 500 crore due to RBI restrictions. A conference call was conducted by the company on Thursday to address these concerns.

Taking to X Paytm founder Vijay Shekhar Sharma said: "To every Paytmer, Your favourite app is working, will keep working beyond 29 February as usual. I with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full compliance."

To every Paytmer,
Your favourite app is working, will keep working beyond 29 February as usual.
I with every Paytm team member salute you for your relentless support. For every challenge, there is a solution and we are sincerely committed to serve our nation in full…

— Vijay Shekhar Sharma (@vijayshekhar) February 2, 2024

Following the RBI's strict stance on Paytm Payments Bank, several brokerages downgraded the stock. Jefferies, for instance, slashed its target price from ₹1,050 to ₹500 per share, citing reputational risks. Jefferies also downgraded Paytm to 'underperform.'

In response to the RBI's announcement, Paytm clarified that the restrictions would not impact user deposits in savings accounts, wallets, FASTags, and NCMC accounts. The company assured users that they could continue to use existing balances in these accounts. Paytm also mentioned that its merchant payments business could be sustained through partnerships with other banks, estimating a potential impact of Rs 300-500 crore on its annual EBITDA in the worst-case scenario.

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