April 27 Trading Sees Sharp Reversal as Investors Assess Limited Core Business Impact
Shares of One97 Communications recovered sharply on Monday, April 27, after an initial sell-off triggered by regulatory action against its subsidiary, Paytm Payments Bank Limited.
The stock dropped 8.38% to ₹1,051.10 in early trade but later pared most losses to close at ₹1,137.80, down 0.83%, reflecting a strong intraday recovery.
The decline followed a decision by the Reserve Bank of India (RBI) to cancel the payments bank’s licence, effective from the close of business on April 25, citing operations conducted in a manner “detrimental to depositors.”
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RBI Action Targets Payments Bank, Not Core Paytm Business
The RBI said Paytm Payments Bank has sufficient liquidity to repay depositors as part of the wind-down process.
The regulatory action applies only to the banking subsidiary and does not directly affect the listed parent company’s core operations.
In an exchange filing, One97 Communications said it has no exposure to PPBL, having fully impaired its investment as of March 31, 2024.
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Analysts Say Impact Is Limited as Structural Separation Already Completed
Abhinav Tiwari said the development is “fundamentally neutral” for the company.
“The event largely formalises the closure of a non-core, non-contributing entity rather than introducing a fresh financial shock,” he said.
He added that Paytm’s core business continues to be driven by payments and financial services distribution, while margin trajectory and regulatory developments remain key monitorables.
Global Brokerages Maintain Positive Ratings and Growth Outlook
Jefferies reiterated a “Buy” rating with a price target of ₹1,350, implying an upside of about 18%.
The brokerage said the company had already undertaken structural changes over the past two years, including UPI migration, wallet shutdown, inter-company separation, and full impairment of its payments bank investment.
Jefferies expects revenue CAGR of 22% between FY26 and FY28 and profit after tax of around ₹1,700 crore by FY28. It highlighted improving profitability trends, although it did not disclose a specific EBITDA margin target in the cited note.
Bernstein maintained an “Outperform” rating with a price target of ₹1,500, implying about 31% upside, noting that the regulatory action is limited to the banking entity.
Key Risks Investors Are Watching
- Regulatory overhang: Continued scrutiny in the fintech sector
- Margin trajectory: Sustainability of profitability improvements without disclosed long-term margin guidance
- Execution risk: Scaling financial services distribution depends on partner bank integrations, merchant adoption, and regulatory approvals for new products
FAQs: Paytm RBI Action and Stock Impact
Why did Paytm stock fall today?
The stock fell after RBI cancelled the licence of Paytm Payments Bank for regulatory non-compliance.
Why did Paytm shares recover later?
Investors reassessed that the impact is limited to a non-core subsidiary.
Is Paytm safe after RBI action?
Yes, the company said it has no exposure to the payments bank, and core services continue normally.
What is Jefferies’ target price for Paytm?
Jefferies has a target price of ₹1,350 with a Buy rating.
What happens to Paytm Payments Bank customers?
RBI said the bank has sufficient liquidity to repay depositors during the wind-down.
