Paytm shares crash 10% today: What's behind the fall?
What's the story
Shares of One97 Communications, the parent company of digital payment platform Paytm, witnessed a steep decline today. The stock plummeted by as much as 10% to ₹1,134.85 per share on the Bombay Stock Exchange (BSE), continuing its downward trend for four out of five trading sessions. The sharp fall is mainly due to market concerns over the future of the Payment Infrastructure Development Fund (PIDF) scheme.
Scheme uncertainty
PIDF scheme's uncertain future raises concerns
The PIDF is an initiative by the Reserve Bank of India (RBI) to bolster digital payment infrastructure in underserved areas. It does this by subsidizing the deployment of Point-of-Sale (PoS) devices and QR codes. The scheme was extended until December 2025, but there has been no word on its continuation beyond that date. This uncertainty has raised concerns among market players about its potential impact on Paytm's business operations.
Revenue impact
Discontinuation of PIDF could hit Paytm's revenue
Analysts have estimated that if the PIDF is discontinued, Paytm could lose an annualized operating revenue of around ₹200 crore. This amount currently contributes directly to the company's EBITDA. Despite these concerns, there has been no official word from RBI on the matter yet.
Positive outlook
Investec initiates coverage on Paytm with a 'Buy' rating
Despite the market concerns, brokerage firm Investec has initiated coverage on Paytm with a 'Buy' rating and a target price of ₹1,550 per share. The firm believes that Paytm's deep tech capabilities and embedded merchant relationships offer long-term pricing power and impose high switching costs in its structurally oligopolistic markets. Investec also noted that with most of its merchant acquisition already in place and a digital-first model, Paytm enjoys substantial operating leverage.