Paytm crisis: One 97 Communications shares surge 9% after Vijay Shekhar Sharma meets FM Nirmala Sitharaman, RBI

Feb 7, 2024

paytm share price todayRoller-coaster journey of: One 97 CommunicationsShares of Paytm's parent company rose as much as 9% to Rs 495.75 on BSE. The increase came after meetings between the company's CEOs Vijay Shekhar Sharma and from officials reserve Bank of India and finance minister Nirmala Sitharaman,
At 10:58 am, shares of One 97 Communications were trading at Rs 490.20, up nearly Rs 40 or 8.66%.
Paytm stock saw a rise today, despite reports of a possible investigation into money-laundering and KYC violations. After experiencing three consecutive days of decline, resulting in a 42% decline, shares closed 3% higher yesterday. According to an ET report, currently, investor sentiment regarding regulatory issues and Paytm's ability to address them remains the main driving force behind its shares.
During the meeting with the Finance Minister, Sharma reportedly discussed the company's stand on RBI concerns. Sitharaman stressed the need for dialogue between Paytm and RBI to address the identified non-compliances.
Sharma also sought extension of the February 29 deadline and presented a transition plan outlining efforts to meet regulatory compliance during the RBI meeting.
While some estimate the stock has bottomed out, analysts caution long-term investors against hasty decisions. He warned of a possible fallout if UPI payments stop after the end of February.
“I think there are better opportunities in the market and it is speculative to do that when you know there is going to be regulatory action. So I would avoid it until there is more clarity. “It (Paytm) is at an all-time low, but in these things you don't know what the bottom is, especially when it comes to regulatory action,” Gurmeet Chadha of Complete Circle Consultants was quoted as saying.
Investor confidence got a boost after a positive report from Bernstein, which gave Paytm an outperform rating with a target price of Rs 600. Bernstein analysts expect Paytm to navigate the regulatory challenges and effectively execute the required operational changes, though they acknowledge the lasting impact on investor sentiment. He believes the regulatory damage will be limited to sectors with high dependence on PPBLs such as wallets, and estimates the breakeven point for the company's balance sheet to shift to FY26.

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