Jefferies Financial Group Drops Coverage on Paytm

Jefferies Financial Group Drops Coverage on Paytm

VoM News Desk | February 19, 2024 | 03:25 PM IST | Technology | Follow on Google News

Jefferies Financial Group Drops Coverage on Paytm

Jefferies Financial Group Drops Coverage on Paytm

Jefferies Financial Group Inc. has become the first major foreign brokerage to stop coverage on One 97 Communications Ltd., the company behind Paytm.

The investment bank has moved the stock to “not rated” until the news flow around Paytm “settles down.”

This decision comes weeks after Jefferies lowered Paytm’s rating to underperform following the Reserve Bank of India’s order for Paytm Payments Bank to halt key operations due to non-compliance.

Paytm has seen a significant drop in its shares, losing more than half of their value since the regulatory clampdown, raising concerns about the continuity of its business model.

Jefferies highlighted that without a banking license, Paytm’s business model will now resemble that of pure payment service providers.

The focus for Paytm is expected to shift to customer retention, and it may use its substantial cash reserves for spending on retaining users.

The RBI has granted Paytm an extension until March 15 to wind down much of its business, allowing the company to continue its merchant payments settlement operations through a tie-up with Axis Bank. Paytm’s shares rose by their 5% daily limit in Monday trading.

VoM News Desk

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