Paytm Stock Dips 3% as Investors Cash In on Recent Gains—What’s Next?

Shares of One 97 Communications, the parent company of Paytm, fell by as much as 3.5% in early trading on September 2. This decline came as investors decided to book profits after a sharp rise in the stock, which had climbed over 15% in just two sessions.

By 10:37 am, Paytm shares were trading at Rs 598.65 on the NSE, down from an intraday high of Rs 631.45 in the previous session.

The recent surge in Paytm’s stock price was largely due to a 12% jump on Friday. This increase followed news that Paytm Payments Services received approval from the Finance Ministry on August 28 for ‘downstream investment’ from its parent company, One 97 Communications, according to the company’s exchange filing.

With this approval, Paytm Payments Services Limited (PPSL), a fully-owned subsidiary of One 97 Communications, plans to resubmit its application for a payment aggregator (PA) license. The company stated, “With this approval in place, PPSL will proceed to resubmit its PA application. In the meantime, PPSL will continue to provide online payment aggregation services to its existing partners.”

This approval is seen as a positive move to help normalize business operations for Paytm Payments Services, especially given past regulatory concerns about the company’s ties with China.

Paytm’s application for a payment aggregator license was rejected by the Reserve Bank of India (RBI) in November 2022. The company was asked to reapply in accordance with Press Note 3, which requires government approval for investments from countries that share land borders with India. At the time, China’s Alibaba Group was the largest shareholder in Paytm.

Since the Reserve Bank of India imposed restrictions on Paytm Payments Bank, Paytm Payments Services has become one of the most significant parts of the fintech firm’s business, accounting for about 25% of its total revenue for the fiscal year 2023.