Paytm share price can fall further to ₹500-levels, say analysts

• RBI's recent curb on Paytm Payments Bank has triggered a fresh spree of Paytm share sell-off.
• Paytm’s shares had plunged nearly 12% two days ago, and on Wednesday, it closed trade at ₹634.
• Global investment bank Macquarie had slashed Paytm’s target price to ₹700 last month.

Even though Paytm was not doing any wonders on the stock exchange, the last one week has turned out to be even worse for the digital payments giant. The Reserve Bank of India’s (RBI) recent curb on Paytm Payments Bank has triggered a fresh spree of share sell off, reducing the company’s share value below ₹700.

Now analysts believe if this sell-off continues, Paytm’s share price could dip down even further to ₹500-₹550 mark. “Paytm share price may touch the level of 500 levels [sic] very soon. The negative sentiments in the stock has triggered a massive sell-off and the probability of rebound very frail. Investors are advised to exit the stock and wait for stability at lower levels for fresh entry,” Ravi Singh, vice president and head of research at Share India, told Business Insider.

Meanwhile, Manoj Dalmia, founder and director of Proficient Equities, believes that Paytm could dip down to ₹547 levels. But the investors should not lose hope just yet. Dalmia also notes that Paytm’s share price looks weak at the current level and a recovery can happen “if consolidation takes place at the current level”. With this, Paytm can retrace back to ₹764, he noted.

“Paytm reported that it has disbursed more than 4 million loans in January and February and the total value stands at ₹2095 crore. It has doubled the total payment value of transactions processed through its merchants to ₹1.65 lakh crore. The price looks weak at the current level…,” he specified.

Nearly 75% of its valuation has been eroded ever since Paytm made its entry into the public market last November. It is important to note that Paytm had raised capital at the valuation of $19.9 billion in its initial public offering (IPO), but its current market capitalisation is ₹41,142 crore ($5.4 billion).

The company’s shares closed at ₹634 on Wednesday. Paytm’s shares had plunged nearly 12% two days ago.

Paytm Payments Bank is a joint venture between Paytm and its founder Vijay Shekhar Sharma. It is important to note that Paytm Payments Bank is not included under the public offering of One 97 Communications, instead it is an associate entity. Paytm Payments Bank is the backbone behind several Paytm offerings including insurance, digital payments and lending.

The central bank had banned Paytm from onboarding new customers after noticing certain “material supervisory concerns”. RBI has directed Paytm Payments Bank to appoint an information technology (IT) audit firm to conduct a comprehensive system audit of its IT system.

Global investment bank Macquarie had slashed Paytm’s target price to ₹700, from previous ₹1,200 in November 2021 and ₹900 in January 2022, in February this year.

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