Paytm’s Shares Fall as Widening Losses Are Anticipated
Paytm’s stock has reportedly fallen considerably amid the company’s troubles with Indian banking regulators.
Shares in Paytm are down roughly 61% in the last six months, Bloomberg News reported Tuesday (May 21), one day before the company is set to issue an earnings report that will likely show growing losses.
That decline is the second-worst drop during the six-month time frame in Bloomberg’s World Index, which monitors large and mid-cap firms, the report said.
Bloomberg says its data indicates Paytm’s fourth-quarter net loss is expected to grow to 4.6 billion rupees ($55 million) from 1.7 billion rupees last year, while revenues are projected to be essentially flat at 23.4 billion rupees.
Paytm’s troubles began in January when the Reserve Bank of India (RBI) — the country’s central bank and banking regulator — ordered the company’s banking offshoot to suspend the bulk of its business. The RBI later ordered Paytm Payments Bank to wrap up all banking activities by the middle of March.
The suspension came after an RBI audit discovered “persistent noncompliances and continued material supervisory concerns.”
A report by Bloomberg News days later — citing sources close to the matter, said the audit found money and data traffic flow between Paytm Payments Bank and Paytm, which led to accounting and supervisory problems.
The sources said the regulator had warned Paytm about these issues but they were not dealt with. In addition, the RBI was also concerned about an overlap in management at the bank and the rest of Paytm, with the same executives undertaking decisions on behalf of both organizations, leading to potential conflicts of interest.
Earlier this month, Paytm parent One97 Communications revealed in a regulatory filing that Bhavesh Gupta, Paytm’s president and chief operating officer, was stepping down from that role for personal reasons. The company also named Rakesh Singh as its new chief executive of its wealth subsidiary, Paytm Money.
“As we aim to scale and position ourselves among the top brokers in India, our focus will be on ramping up acquisition and delivering stable, innovative products at a low-cost, transparent price,” Singh said in a statement included with the filing.
“Focusing on growing an already profitable operation with full compliance to … regulations will be a top priority.”
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