Morgan Stanley Picks 0.8% Stake In Paytm For Rs 244 Crore

Morgan Stanley Asia bought a 0.78% stake in Paytm operator One97 Communications Ltd. on Friday for over Rs 243 crore via open market operations.

The brokerage mopped up 50 lakh shares, according to data on bulk deals from the National Stock Exchange.

Paytm's stock hit a 20% lower circuit for the second consecutive day and wiped out investors' wealth worth Rs 15,016 crore during the period.

The RBI found persistent non-compliance and major supervisory concerns at the company's payments bank. One97 Communications said it would be working only with other banks and not its own payments bank from now on.

Of the 15 analysts tracking the company, six have a 'buy' rating on the stock, five recommend 'hold' and four suggest a 'sell', according to Bloomberg data. The average of 12-month analyst price targets implies a potential upside of 59.5%.

According to Bloomberg, Morgan Stanley slashed the target price of Paytm by about 20% to Rs 555 while maintaining 'equal weight'.

One of the key tracking points will be whether customers can be transitioned to another bank partner all at once, or if this will have to be done individually, Bloomberg said quoting the brokerage. “We see near-term regulatory uncertainty and execution risk persisting, and maintain our bear case probability weighting at 45%,” it said.

Shares of One97 Communications closed 20% lower at Rs 487.05 apiece on the BSE, as compared with a 0.61% advance in the benchmark BSE Sensex.