Shares of One97 Communications Ltd., the parent of Paytm, hit a 52-week high on Wednesday, August 13, after the Reserve Bank of India (RBI) granted in-principle approval to its subsidiary, Paytm Payments Services Ltd. (PPSL), to function as an online payment aggregator. With this, the RBI has lifted the merchant onboarding ban imposed in November 2022. However, PPSL must conduct a system and cybersecurity audit and submit the report within six months. Failure to do so will cause the provisional approval to lapse, and final authorisation will not be granted.
Previously, Paytm’s management stated that the restrictions only affected new merchant onboarding and had no material business impact. Recently, Chinese investor Antfin exited Paytm by selling its remaining stake at a loss, similar to Berkshire Hathaway’s earlier exit.
Citi has a “buy” rating on Paytm with a target of ₹1,215, calling the approval a major sentiment boost. Bernstein, with an “outperform” rating and ₹1,100 target, views the development as a long-term positive. Of 19 analysts covering the stock, 10 recommend a “buy.” Paytm shares opened 4.3% higher at ₹1,167.9 and have surged nearly 50% in six months, although still below their IPO price of ₹2,150.