Vijay Shekhar Sharma, the founder and CEO of Paytm, has resigned as part-time non-executive chairman and board member of Paytm Payments Bank Limited (PPBL). This move comes nearly a month after the Reserve Bank of India (RBI) took regulatory action against PPBL.
Following Sharma’s resignation, Paytm shares experienced a 5% rally in morning trading. However, the gains were short-lived as volatility gripped the market, with investors seeking clarity on whether the board restructuring would address RBI concerns.
One97 Communications Limited, the parent company of Paytm, announced that PPBL had reconstituted its board, stating that Sharma’s resignation will facilitate this transition. Brokerage firm Macquarie interpreted Sharma’s move as an attempt to salvage value from PPBL and signal to regulators a willingness to relinquish control.
Macquarie’s note highlighted the pivotal role of RBI in determining PPBL’s future viability, suggesting that the bank’s survival hinges on regulatory leniency for its banking operations. The brokerage expressed optimism that PPBL could enhance Paytm’s profitability if it operates independently.
Despite this, Macquarie maintained an “underperform” rating on Paytm stock with a target price of Rs 275, having downgraded it just two weeks earlier. The average rating from 13 analysts on Paytm is “hold,” with at least two brokerages discontinuing stock coverage.
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As of 10:30 am, Paytm shares traded 1.40% higher on the Bombay Stock Exchange (BSE) at Rs 434.10 apiece.
Sharma’s resignation from PPBL amid regulatory scrutiny has prompted market speculation about the impact on Paytm’s performance and the future of PPBL. The response from investors and analysts suggests a cautious approach, awaiting clarity on regulatory actions and the bank’s operational independence.
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