Since June this year, the share price of Paytm has been on an upward trajectory after enduring four consecutive months of decline. On July 8, Paytm’s stock witnessed a significant surge, rising nearly 10% in intraday trading on the BSE. Opening at ₹437.55, the shares of One 97 Communications, Paytm’s parent company, quickly escalated to trade 9.07% higher at ₹476.20 apiece. This remarkable rise occurred even as the Sensex dipped slightly by 0.12% to 79,897.
Steady Recovery After a Prolonged Downturn
Since June, Paytm’s share price has been steadily climbing, reversing a prolonged period of selloff. In June, the stock rose over 11%, and July has already seen gains exceeding 18%. This upward trend marks a significant recovery for Paytm, which had suffered massive losses following regulatory actions by the Reserve Bank of India (RBI).
Impact of RBI Regulations
The downfall began when the RBI directed Paytm to close its payments bank arm, Paytm Payments Bank (PPBL), from March 15 due to non-compliance with KYC norms and other mandated processes. This led to a steep decline in Paytm’s share price, which has fallen 53% so far this year. The stock hit its 52-week high of ₹998.30 on October 20 last year, plummeting to a 52-week low of ₹310 on May 9 this year.
Insights from Vijay Shekhar Sharma
In response to the challenges, Paytm’s founder and MD, Vijay Shekhar Sharma, likened the company’s situation to a daughter recovering from an accident and currently in the ICU. Reflecting on the company’s journey, Sharma admitted, “At a professional level, I would rather say we should have done better; there is no secret about it. We should have understood better… and we had responsibilities, we should have fulfilled, in a much better way… we learnt the lesson.”
Financial Performance
The recent uptick in Paytm’s share price comes amid a backdrop of declining revenue and widening losses. Paytm reported a drop in revenue to ₹2,399 crore from ₹2,465 crore in Q4 FY23 compared to the previous year. Losses also widened to ₹551 crore, up from ₹168 crore in Q4 FY23 from the previous year.
Conclusion
Despite these setbacks, the recent surge in Paytm’s share price indicates a potential turnaround. Investors and market analysts are closely watching Paytm’s next moves, as the company strives to regain its foothold in the market. The coming months will be crucial in determining whether this positive trend can be sustained and if Paytm can continue to rebuild investor confidence.
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