Jefferies Financial Group Inc has dropped coverage on Paytm-operator One 97 Communications Ltd until the news flow around the struggling Indian fintech major “settles down”.
Paytm representation Image (Photo:IANS)
Jefferies Financial Group Inc has dropped coverage on Paytm-operator One 97 Communications Ltd until the news flow around the struggling Indian fintech major “settles down”.
The foreign brokerage became the first major foreign brokerage to drop coverage, and has moved the stock to “not rated”, weeks after lowering it to underperform after the Reserve Bank of India last month ordered Paytm Payments Bank to halt its key operations, citing non-compliance.
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“Without a banking license, Paytm’s business model will now become similar to pure payment service providers,” Jefferies analysts Jayant Kharote and Prakhar Sharma wrote in a note.
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“Paytm’s focus will now move to ensuring customer retention, and we believe it will dip” into its Rs 85 billion (USD 1 billion) cash reserves for spends on retaining users,” he added.
Notably, Paytm has seen its shares lose more than half of their value since the banking regulator’s surprise clampdown amid concerns over the continuity of its business model.
The crisis-ridden Paytm has tied up with Axis Bank to replace affiliate Paytm Payments Bank to continue its merchant payments settlement operations, allowing it a shot to stay in business. Paytm’s shares jumped by their 5 per cent daily limit in Monday trading.
The Reserve Bank of India has further extended the date to stop all transactions for Paytm Payments Bank till March 15.
Earlier, it had asked the Fintech giant to stop Payments Bank operations from February 29.
“No further deposits or credit transactions or top ups shall be allowed in any customer accounts, prepaid instruments, wallets, FASTags, National Common Mobility Cards, etc. after March 15, 2024 (extended from the earlier stipulated timeline of February 29, 2024), other than any interest, cashbacks, sweep in from partner banks or refunds which may be credited anytime,” the RBI has said in a statement.
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