Paytm shares surge over 7% after hitting an all-time low

Paytm shares touched a 52-week low and then rose over 7% to Rs 635.00 on the BSE in Wednesday’s intraday session, after Softbank managing partner Munish Ravinder Varma resigned from the board of the digital financial services company One97 Communications, which operates the Paytm brand, and PB Fintech, according to regulatory filings by both companies on Tuesday.  Softbank Vision Funds India Holdings (Cayman) owns a 17.47% stake in Paytm. 

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“Munish Ravinder Varma, non-executive, non-independent director of the company, has tendered his resignation vide resignation letter dated March 14, 2022, with effect from the closure of business hours on March 14, 2022, due to personal commitments and other preoccupations,” Paytm said in a filing. 

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The company had launched Rs 18,300 crore IPO in November but the stock has been in free fall since and is down about 70% from the issue price of Rs 2,150 and its IPO valuation of Rs 1.4 lakh crore is now down to a market cap of Rs 44,000 crore. 

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The Reserve Bank of India last week ordered Paytm Payments Bank to stop taking on new customers, citing “material supervisory concerns”, and directed the bank to appoint a company to audit its IT system. 

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In reply, Paytm Payments Bank said it is taking all steps to comply with the RBI orders. “Dear customers, we value your relationship with us. We are taking all steps to comply with the RBI directions. Our existing customers can continue to seamlessly use all our banking services,” according to a company statement.

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On Monday Bloomberg reported that the RBI acted against Paytm Payments Bank as it had allegedly allowed data to flow to servers in China in violation of India’s rules, and didn’t properly verify its customers. The company has since refuted the allegations.

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One97 Communications, the parent of payments platform Paytm, reported a net loss of Rs 778.4 crore for the quarter ended December, according to its exchange filing. That compares with a net loss of Rs 535.5 crore a year earlier. Revenue from payment services to merchants stood at Rs 586 crore, up 117% from a year ago. 

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Revenue from payment services to customers rose 60% year-on-year to Rs 406 crore. Total direct expenses rose 43%. Most of the rise was driven by a 51% year-on-year increase in payment processing charges, which stood at Rs 783.1 crore. Gross merchandise value rose 123% year-on-year to Rs 2.5 lakh crore. 

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Paytm’s contribution profit rose 74% sequentially to Rs 453.7 crore. Similarly, the profit margin rose to 31.2% from 24% as of September 30. The company disbursed loans worth Rs 2,181 crore during the quarter, up 73% over the previous quarter.