New Delhi: Shares of One 97 Communications, the parent company of Paytm, extended its freefall on Monday, as it dropped another 13 percent on the back of negative news flow. The Reserve Bank of India (RBI) has barred Paytm Payments Bank from adding new customers due to likely gaps in its technology systems.
The bank has also been directed to appoint an IT audit firm to conduct a comprehensive system audit of its IT system, the RBI said in a release.
Following the development, shares of Paytm dropped as much as 13 percent to Rs 672.10 before recovering to Rs 686.25 at 9.30 am. The scrip had settled at Rs 774.80 on Friday.
BSE barometer and benchmark Sensex was trading 180.63 points or 0.33 percent, higher at 55,730.93 at the time of writing this report.
The fintech startup had launched India’s largest IPO of Rs 18,300 crore in November but the stock has been dwindling since its listing. The scrip has tumbled about 70 percent of its value compared to the issue price of Rs 2,150.
Brokerage firm Macquarie has maintained a target price of Rs 700 with an ‘underperform’ rating on Paytm. With RBI banning payments banks from adding customers, Macquarie does not expect the impact on its business to be substantial.
Compared to its IPO valuation of Rs 1.5 lakh crore, the stock’s valuation has now slipped below Rs 44,000. Paytm Payments Bank was eyeing to apply for a small finance bank license.
“The immediate impact will be negative as they can’t onboard new customers. This also speaks volumes about internal controls, especially the onboarding process of new customers,” independent market expert Ambareesh Baliga told ET.
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