Why Paytm shares hit lower circuit today and reached an all-time low is explained. For the third straight trading session on Monday, shares of One97 Communications Limited, the company that owns digital payments startup Paytm, fell below their lower circuit limit. Paytm’s stock has dropped to an all-time low as a result.
Following a 10% decline, Paytm shares were trading at Rs 438.50 each, continuing their terrifying run on Dalal Street following the Reserve Bank of India’s action against its partner, Paytm Payments Bank Limited.
It should be mentioned that stock exchanges have now changed the lower circuit limit to 10% following consecutive 20% losses on Paytm.
As a result, Paytm’s stock has dropped by more than 43% during the last five trading days due to increased selling pressure on the business.
Paytm’s stock is plunging
Paytm has been responding to the RBI’s notification by going into firefighting mode, but it appears that investors are very concerned about the company’s recent happenings.
The issue has become more turbulent due to many media reports claiming that the Enforcement Directorate (ED) is looking into the firm and its CEO, Vijay Shekhar Sharma, for possible money laundering.
But in a statement, Paytm vehemently disputed that the ED had conducted any such probe.
The Enforcement Directorate is not looking into the Company, its founder, or its CEO in relation to, among other things, money laundering.
We have always complied with the authorities when questions have been made about specific merchants or individuals on our platforms in the past, the company stated.
To clear up any confusion, we firmly reject any participation in any anti-money laundering initiatives. Paytm stated, “We have adhered to Indian laws and will continue to do so. We also take regulatory orders very seriously.”
The attention is on Paytm.
Even still, investors are still unloading Paytm shares on Dalal Street, believing that the RBI’s move will materially affect the company’s future operations. As a result, the clarification has not been able to protect the company’s stock.
A Bloomberg story, meantime, said that the RBI may revoke the license of Paytm Payments Bank as soon as next month.
According to a different research, businesses should stop using Paytm and instead use alternative payment methods recommended by the trader association CAIT.
Furthermore, because of RBI regulations, a few brokerages have reduced their target prices for Paytm.
Macquarie cut its target price to Rs 650 per share, while Jefferies downgraded it to ‘Underperform’ with a target price of Rs 500 per share. Regarding Paytm’s business strategy, Motilal Oswal is hesitant and has recommended a goal of Rs 575.
