In a noteworthy turn of events, Paytm shares experienced a 5% jump on Monday following a strategic partnership with Axis Bank and the Reserve Bank of India (RBI) extending the deadline for its banking arm. The stock hit an upper trading limit at 358.35 rupees, signaling positive investor sentiment.
The RBI granted Paytm Payments Bank an extension until March 15 to cease accepting fresh deposits, providing a smoother transition for the transfer of accounts. Analysts at Bernstein see this extension as facilitating a seamless process. Paytm’s collaboration with Axis Bank, announced on Friday, is a strategic move to sustain popular products amidst the current crisis.
According to Citi, more such partnerships are likely in Paytm’s future, seen as significant positives for ongoing business. Despite maintaining a ‘Sell’ rating and a 550 rupees price target, Citi acknowledges the potential impact of these partnerships.
Bernstein highlights the positive aspect of merchants being able to continue using Paytm QR codes, soundbox, and card machines linked to non-Paytm Payments Bank accounts, considering it a major positive development.
Paytm shares have faced a challenging period, declining by 53% since the RBI’s Jan. 31 order against Paytm Payments Bank due to persistent non-compliance with regulations. This downturn has resulted in the erosion of 255.74 billion rupees ($3.08 billion) in shareholders’ wealth.
Analysts, on average, currently rate Paytm as a ‘Hold’ according to LSEG data, with five ‘Sell’ or ‘Strong sell’ recommendations, the highest in at least a year. The dynamics of this strategic collaboration and the extended deadline provide a fresh perspective on Paytm’s trajectory in the market.
