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 Sharmaโs 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 Sharmaโs resignation will facilitate this transition. Brokerage firm Macquarie interpreted Sharmaโs move as an attempt to salvage value from PPBL and signal to regulators a willingness to relinquish control.
Macquarieโs note highlighted the pivotal role of RBI in determining PPBLโs future viability, suggesting that the bankโs survival hinges on regulatory leniency for its banking operations. The brokerage expressed optimism that PPBL could enhance Paytmโs profitability if it operates independently.
Despite this, Macquarie maintained an โunderperformโ 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 โhold,โ 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.
Sharmaโs resignation from PPBL amid regulatory scrutiny has prompted market speculation about the impact on Paytmโs performance and the future of PPBL. The response from investors and analysts suggests a cautious approach, awaiting clarity on regulatory actions and the bankโs operational independence.
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