Paytm Share Price Slumps 5% Following Vijay Shekhar Sharma’s Resignation

Paytm Share Price Slumps 5% Following Vijay Shekhar Sharma's Resignation

VoM News Desk | February 28, 2024 | 05:27 PM IST | Breaking News | Follow on Google News

Paytm Share Price Slumps 5% Following Vijay Shekhar Sharma’s Resignation

Paytm Share Price Slumps 5% Following Vijay Shekhar Sharma’s Resignation

Paytm’s share price experienced a 5% decline, hitting its lower circuit at ₹406.1, as investors reacted to the resignation of Vijay Shekhar Sharma as part-time non-executive chairman and board member at Paytm Payments Bank. Despite the stock hitting a 5% upper circuit for two consecutive trading sessions, concerns lingered among investors.

Near-Term Financial Impact Predicted by UBS

Global brokerage firm UBS highlighted the potential near-term financial impact on Paytm’s business, projecting some permanent loss in FY25E. The firm expects Paytm to lose 5-7 percentage points of its 25% share in the payments industry, attributing 2-3 percentage points to a permanent loss in the wallet and the remainder to merchant/customer churn. UBS estimates a decline in net payments margin to the 6-7 basis points range from the 7-9 basis points range, considering the loss of high-margin wallet business and likely easier terms to retain merchants.

UBS Reaffirms ‘Neutral’ Rating with Revised Target Price

While reaffirming its ‘Neutral’ rating on Paytm, UBS revised down its target price from ₹650 to ₹510. The firm noted that loan origination is expected to be paused for most of Q4 and then pick up post-stabilization of the payments business in FY25E. UBS forecasts a 14% YoY decline in loan disbursements in FY25E and models a smaller 18% decline in cloud and commerce in Q4, anticipating less direct impact and an 18% YoY growth in FY25E.

Paytm Payments Bank Board Reconstitution and Sharma’s Resignation

Earlier this week, One 97, the parent company of Paytm, announced the reconstitution of the board of directors of its associate entity, Paytm Payments Bank. The move included the appointment of new board members, notably Srinivasan Sridhar, Debendranath Sarangi, Ashok Kumar Garg, and Rajni Sekhri Sibal as Independent Directors. Vijay Shekhar Sharma resigned from the board of Paytm Payments Bank, facilitating the transition to a board with only independent and executive directors, as informed by One 97. OCL, the associate entity, expressed support for the move and stated that the process of appointing a new Chairman would commence.

VoM News Desk

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