Paytm under scanner: Paytm clarifies BSE query after parent shares dip to all-time low

The BSE has sought a clarification from One 97 Communications, the parent firm of payments solution company Paytm, over the sharp fall in its share prices.

"The exchange has sought clarification from One 97 Communications on March 22, 2022 with reference to significant movement in price, in order to ensure that investors have latest relevant information about the company and to inform the market so that the interest of the investors is safeguarded," BSE said, adding that "the reply is awaited".

One 97 Communications shares closed at Rs 543.90 on the BSE, down 3.8 percent on March 22 and so far corrected 74.7 percent from its issue price of Rs 2,150 per share. On listing day itself, November 18, 2021, it settled lower by 27 percent.

BSE asking for clarification is not common. The exchange has not specified what the "significant movement" is even as the stock has come to a fourth of the IPO price.

In a statement to the exchanges on March 23, One 97 Communications clarified the BSE's query. It read: "We would like to inform you that our Company has been complying with Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (Listing Regulations) and have, from time to time, made all necessary disclosures to the Stock Exchanges within stipulated timeline. Further, as on date, there is no information/ announcement, which in our opinion may have a bearing on the price/ volume behaviour in the scrip of the Company and which is yet not disclosed to the Stock Exchanges."

"The Company would also like to point out the business fundamentals remain robust as demonstrated in our last earning release dated February 04, 2022," it noted.

"We would like to reiterate that the Company is committed to comply with the Listing Regulations and any information/ announcement, likely to have bearing on the price/ volume of the shares of the Company would be disclosed, from time to time, to the Stock Exchanges within stipulated timeline," the statement added.

As it happened

At issue price of Rs 2,150, it had asked for a market capitalisation of Rs 1,39,432.7 crore, which has plunged to Rs 35,273.23 crore now. The stock has witnessed a market cap erosion of Rs 1.04 lakh crore in four months.

Macquarie Capital Securities had, last week, slashed the target price of One97 Communications to Rs 450, down by 36 percent as compared to Rs 700 it had predicted in February.

The brokerage firm sharply marked down its valuation estimate for Paytm in line with the derating since in global financial technology companies.

The shares lost a major portion of their value after Paytm Payments Bank, a subsidiary of Paytm, came under the scanner of the Reserve Bank of India (RBI). The banking sector regulator, on March 11, sent a letter to the lender barring it from onboarding new customers.

"RBI's regulations on digital payments and BNPL (Buy Now Pay Later), and stricter KYC and compliance norms will all be adverse developments for fintech companies in general, potentially bringing down unit economics and/or growth, in our view. We see these as additional headwinds for Paytm, which could cloud its path towards profitability," the Macquarie report stated.

"Paytm stock is in a continuous downtrend on negative sentiments and may touch the levels of 500 - 450 in the near term. Investors must avoid this stock for time being," said Dr Ravi Singh-vice president at ShareIndia.