Paytm hits 5% upper circuit after CEO VSS assures on QR code and soundboxes beyond March 15

20 Feb 2024 , 10:56 AM

Paytm shares rose 5% on February 20 after founder and CEO Vijay Shekhar Sharma assured that its QR code and soundbox facilities would continue to work even after the Reserve Bank of India’s March 15 deadline for strict restrictions imposed on the bank.

‘Paytm QR, soundbox, and EDC (card machine) will continue to function as usual even after March 15. The RBI’s most recent FAQ on point #21 defines it explicitly. Do not believe any rumours or allow anybody stop you from promoting Digital India,’ Sharma tweeted on X (previously Twitter).

The RBI indicated that retailers (approximately 80%, according to management) employing Paytm QR or soundbox linked to another bank account can continue after March 15.

Jefferies India has withdrawn its rating on Paytm until the ‘news flow settles down’ around the fintech major’s struggle against RBI regulatory proceedings. The brokerage said it has downgraded Paytm to ‘not rated’ from ‘underperform’ and now expects a 28 percent year-on-year decrease in FY25 sales, pushing the company into cash burn.

The rationale for the income drop was to account for the direct and indirect impact of the RBI’s FAQs, which reiterated the closure of PPBL’s activities (deposit accounts, wallets, and so on), but platforms outside of PPBL (Paytm app, UPI transfers, merchant payments, and loan originations) can continue.

While Paytm has changed its nodal account from PPBL to Axis Bank, the move brings its business model closer to those of pure payment service providers such as PhonePe, GPay, Pine Labs, and others. According to Jefferies, Paytm’s shift in focus to retain consumers and merchants might lead to the use of its ₹8,500 Crore cash reserves.

At around 10.37 AM, Paytm was trading 5% higher at ₹376.25, against the previous closing price of ₹358.35 on NSE. 

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