Paytm slide continues as CEO fails to allay concerns over profitability, damning report

Stocks

Shares of Paytm have fallen close to 70 percent from the initial public offering price of Rs 2,150.

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Shares of One 97 Communications, parent of Paytm, fell another 5 percent on March 15 on top of the 13 percent decline on March 14 as investors continue to desert the stock on rising concerns over its business model and path to profitability.

Compounding woes for Paytm, a Bloomberg report on Monday said that the Reserve Bank of India’s diktat banning the company’s payments bank from onboarding customers was likely linked to sharing of local data with Chinese servers and for failing to properly verify customers.

Paytm founder and chief executive officer Vijay Shekhar Sharma told Moneycontrol in an exclusive interview that the Bloomberg report was “malicious”.

“I want to call out that it is an absolutely malicious story which does not corroborate the facts of the business that we are in. I want to say this clearly – this is stemming from malicious intent. Not just that, it is absolute rubbish,” Sharma said.

However, the steep decline in the stock price today suggests that investors remain far from convinced.

Currently, the decline in the stock price of the fintech major was backed by 43 percent delivery volumes, which was more than two times the average 20-day delivery volumes. The higher-than-usual delivery volumes on the stock suggest that investors are concerned that the RBI’s action against the payments bank could deal a blow to the overall brand of Paytm.

Analysts are concerned that the ban on onboarding customers will lead to a significant impact on the revenue of the business even though Sharma said that the RBI’s move will have no major impact.

Dipan Mehta of Elixir Equities told CNBC-TV18 that investors still have no clarity on the road to profits which is the biggest factor behind the selling. Shares of Paytm have fallen close to 70 percent from the initial public offering price of Rs 2,150.

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