Paytm Erases $2 Billion in Two Days as RBI Action Spooks Market

Paytm’s shares plunged 20% for a second day, continuing a slump triggered by India’s central bank banning much of its business.

A QR code for the Paytm digital payment system at a store in Mumbai, India, on Thursday, Feb. 1, 2024. Shares of digital-payments provider Paytm plunged 20% after Indian regulators ordered it to halt a bulk of its business, dealing a severe blow to a high-profile tech pioneer that grappled for years with authorities.

Paytm’s shares plunged 20% for a second day, continuing a slump triggered by India’s central bank banning much of its business.

Regulatory troubles for the digital payments giant are mounting after the Reserve Bank of India ordered its unit Paytm Payments Bank Ltd. to stop many of its activities, citing persistent non-compliance and supervisory concerns. A conference call held after market hours on Thursday failed to inspire investor confidence. At least five brokerages, including JPMorgan Chase & Co. and Citigroup Inc., downgraded the stock to sell.

The two-day decline has erased over $2 billion in market value in the company that counts Alibaba’s Antfin Singapore Holding Pte. and SoftBank Group Corp. among its investors.

“The order materially impacts Paytm’s core payments business at 59% of revenue,” JPMorgan analysts including Ankur Rudra wrote in a note. While this is likely to have less impact on its other businesses, it dilutes the network effects of Paytm’s “merchant-consumer” ecosystem and brand credibility over time, unless the company can successfully migrate its business to other banks, they said.

Paytm is now down about 77% from its initial public offering in 2021. The company said in the recent conference call that operations should be back to “fully normal” by early March and it is accelerating plans to partner with other banks.

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