Paytm Shares Rise 10% Following Circuit Filter Revision and Recovery Efforts

Mumbai, On Friday, shares of One97 Communications, the parent company of fintech behemoth Paytm, rose by 10% on the BSE. This significant increase follows a weak market performance earlier in the week and represents a larger recovery effort within the organization.

The Paytm stock, which fell sharply on June 4 and 5 following the Lok Sabha election results, began to recover on Thursday, gaining about 2%. On Friday, the shares rose by 10% to an intra-day high of ₹381.20 from a previous closing of ₹346.55. As of 12:20 PM on Friday, the shares were trading at ₹376.80, up ₹34.65 or 10%.

Paytm’s recent share price increase can be linked to One97 Communications’ circuit filter being revised from 5% to 10%. The stock surged from ₹349.10 to its intra-day high following this development. The company’s market capitalization currently stands at ₹24,236.41 crore.

Despite this excellent development, Paytm has experienced significant obstacles in the last year. The company’s share price has fallen by 47.55% in the last year, 40.98% year to date, and 42.35% in the last six months. This drop has been compounded by the Reserve Bank of India’s (RBI) harsh steps against Paytm Payments Bank, a former Paytm partner firm. On January 31, 2024, the RBI stopped the bank from onboarding new customers and imposed several business limitations.

One97 Communications reported losses of ₹550 crore for the quarter ending March 31, 2024, up from ₹167 crore the previous year. The company reported losses of ₹227 crore on its investment in Paytm Payments Bank. Paytm’s income decreased by 3% year-over-year to ₹2,267 crore in Q4 FY24 from ₹2,334 crore in Q4 FY23. This was due to temporary disruptions from the UPI changeover and permanent disruptions from banking and regulatory constraints.

Vijay Shekhar Sharma, the creator of Paytm, continues to have a large stake in One97 Communications, owning around 19%. Elevation Capital holds a 15% investment, while Alibaba’s Antfin owns 10%.

The stock is showing signs of recovery, up 14.21% in the last month and 0.67% in the last week. However, it is still 61.8% lower than its 52-week high of ₹998.30 set on October 20, 2023.

Analysts believe that, while the current spike in Paytm’s stock is a positive indication, the business must address its bigger financial issues and regulatory hurdles in order to continue growing long-term. The change to the circuit filter and accompanying increase in stock price may provide a brief respite, but long-term recovery requires strategic efforts and improved financial performance.

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