BENGALURU: Shares of Indian payments firm Paytm rose 5% on Monday, after the country’s central bank granted its banking arm more time to wind down operations and the company partnered with Axis Bank to try to keep some of its popular products running.
The stock hit an upper trading limit of 358.35 rupees.
The Reserve Bank of India (RBI) on Friday extended the deadline for Paytm Payments Bank to stop accepting fresh deposits in its accounts or wallets to March 15 from Feb. 29. Analysts at Bernstein said the extension of the deadline would facilitate a “smooth transition” for transferring Paytm Payments Bank accounts.
Paytm, on Friday, also enrolled Axis Bank as a new banking partner aimed at sustaining some of its popular products as part of its efforts to address the current crisis.
Brokerage Citi said in a note that the company is likely to pursue more such partnerships, viewing them as “significant positives for ongoing business,” while maintaining its “Sell” rating and 550 rupees price target on the stock.
Thousands of accounts at India’s Paytm Payments Bank set up improperly
Bernstein, meanwhile, said merchants being able to use Paytm QR codes, soundbox and card machines as long as they are linked to a non-Paytm Payments Bank account is a “major positive.”
Paytm shares have fallen 53% since the RBI’s Jan. 31 order against Paytm Payments Bank that was triggered by what the central bank officials called persistent non-compliance with regulations.
The stock rout has eroded 255.74 billion rupees ($3.08 billion) in shareholders’ wealth. Analysts on average rate Paytm “Hold”, according to LSEG data. The stock has five “Sell” or “Strong sell” recommendations, its most in at least a year.
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