Impact of RBI's Cancellation of Paytm Payments Bank License on Parent Company Shares
Paytm Payments Bank licence cancellation: Jefferies, Bernstein and Goldman decode impact
The Economic Times
Image: The Economic Times
Shares of One 97 Communications, the parent company of Paytm, fell approximately 8% following the Reserve Bank of India's cancellation of Paytm Payments Bank's license. However, analysts from Jefferies, Goldman Sachs, and Bernstein suggest limited direct financial impact on Paytm, maintaining positive ratings and target prices for the stock.
- 01Paytm shares dropped 8% but later recovered due to positive analyst ratings.
- 02Jefferies maintains a 'Buy' rating with a target price of ₹1,350, indicating an 18% upside.
- 03Goldman Sachs also keeps a 'Buy' rating but lowers its target to ₹1,400, reflecting a 31% upside.
- 04Bernstein expresses concern over the RBI's harsh language but retains an 'Outperform' rating with a target of ₹1,500.
- 05Technical indicators suggest potential volatility in Paytm's stock price in the near term.
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The Reserve Bank of India's (RBI) decision to cancel the banking license of Paytm Payments Bank (PPBL) led to a significant drop in shares of One 97 Communications, the parent company of Paytm, which fell by approximately 8% to an intraday low of ₹1,051. However, the stock later rebounded to ₹1,129 as analysts provided positive insights. Jefferies maintained a 'Buy' rating with a target price of ₹1,350, suggesting an 18% upside, while Goldman Sachs reduced its target to ₹1,400, indicating a 31% upside despite viewing the RBI's action as a minor negative. Bernstein expressed concerns over the RBI's 'harsh' language but retained an 'Outperform' rating with a target of ₹1,500. Analysts noted that there is no direct financial impact on Paytm, as the company had already impaired its investment in PPBL. Technical analysts suggest that Paytm's stock may experience volatility, with critical support at ₹1,050 and resistance around ₹1,140. Investors are advised to approach with caution until a clear trend reversal is confirmed.
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The RBI's cancellation of Paytm Payments Bank's license may affect customer sentiment towards Paytm, but analysts believe the core business remains strong, with no immediate financial repercussions for the parent company.
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