Paytm Share Price Crashes Nearly 60% in Less Than 4 Months

Synopsis – Experts suggest people must refrain from investing in the company shares as allegedly this may show the bearish trend further as well, seeing the current scenario and the uncertainty of it reclaiming its place in the market again. This becomes much tough for the company due to the imposed restrictions by the central bank and no clarity over its removal.

Online payment giant Paytm’s parent company One97 Communications has reported over a 60% crash in share prices in less than the last 4 months. This has led to the company’s name being dropped out of the BSE’s (Bombay Stock Exchange) top 100 most valued companies.

Recently, Paytm was barred from taking up new customers for Paytm Payments Bank and by the Reserve Bank of India (RBI) over the allegations of sharing user data with its Chinese firms. This is said to be one of the reasons leading to the crash in share prices.

Experts suggest people must refrain from investing in the company shares as allegedly this may show the bearish trend further as well, seeing the current scenario and the uncertainty of it reclaiming its place in the market again. This becomes much tough for the company due to the imposed restrictions by the central bank and no clarity over its removal.

Notably, the company’s revival is uncertain due to the increasing competition in the sector while it is lagging behind due to the mentioned reasons. So, it becomes difficult to predict when the company will be back making a profit again.

Trend, from when Paytm was listed for the share market:

The company made a grand entry in the share market in November 2021 by listing itself for IPO (Initial Public Offerings). Although, the company’s entry had been a glamourous red carpet walk when it came to IPO listing and the initial days. It had raised 18,300 crore rupees that sitting around $2.4 billion, at the valuation of $20 billion. It made it the biggest ever IPO in India.

However, on November 18, when the shares began trading, that opened at 1,950 rupees on NSE which still is below the upper band of the IPO price range by 9.3%, it closed down at 1,560 rupees which the biggest fall in the IPO history on a listing day.

Overall, the company’s shares are down by 70% since then and out of which 60% has been reported in less than four months. The ongoing difficulties continue to add problems to the way of the company’s profit-making while it already struggles to keep the momentum amid tough competition by its rivals.

Punishment by RBI

India’s Central Bank, the Reserve Bank of India had punished the fintech’s banking arm ‘Paytm Payments Bank alleging it of flouting the Know Your Customer (KYC) and privacy rules by allowing the data to flow through the servers of the China-based companies that own stake in Paytm Payments Bank.

Yogesh Dayal, Chief General Manager, Reserve Bank of India, said in a statement, “Reserve Bank of India has today, in the exercise of its powers, inter alia, under section 35A of the Banking Regulation Act, 1949, directed Paytm Payments Bank to stop, with immediate effect, onboarding of new customers.”

“The bank (Paytm Payments Bank) has also been directed to appoint an IT audit firm to conduct a comprehensive System Audit of its IT system. Onboarding of new customers by Paytm Payments Bank will be subject to specific permission to be granted by RBI after reviewing the report of the IT auditors,” Dayal added.