Paytm Shares Surge 5% After NPCI Approves UPI Participation; Morgan Stanley Remains Positive
In a significant development, shares of India’s leading digital payment platform, Paytm, witnessed a notable 5% surge following the approval from the National Payments Corporation of India (NPCI) for its parent company, One97 Communications Limited (OCL), to participate in UPI services as a Third-Party Application Provider (TPAP). This approval comes amidst recent challenges faced by Paytm, including regulatory hurdles and a significant decline in stock performance.
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NPCI Approval Details
NPCI’s statement revealed that YES Bank would serve as the merchant acquiring bank for both existing and new UPI merchants associated with OCL. Moreover, the “@Paytm” handle will now be redirected to YES Bank, ensuring seamless UPI transactions and AutoPay mandates for users and merchants. NPCI also advised Paytm to swiftly migrate all existing handles and mandates to new PSP banks. SBI, Axis Bank, HDFC Bank, and YES Bank have been appointed as payment service providers for Paytm.
Stock Performance
Paytm’s stock has faced downward pressure, particularly after RBI’s restrictions on Paytm Payments Bank’s operations. Year-to-date, Paytm’s stock has plummeted by over 44%, reaching a record low of ₹318 per share on February 16. However, the recent NPCI approval has sparked optimism among investors, leading to a notable surge in share prices.
Morgan Stanley’s Perspective
Financial giant Morgan Stanley has welcomed NPCI’s approval as a positive development in line with expectations. The brokerage firm anticipates updated insights into the company’s business dynamics following Paytm Payments Bank’s transition to alternative banking partners. Morgan Stanley has maintained an ‘equal-weight’ call on Paytm’s stock, setting a target price of ₹555. This forecast suggests a potential upside of 57% from the current levels, indicating confidence in Paytm’s long-term prospects despite recent challenges.
The approval from NPCI for Paytm’s participation in UPI services marks a significant milestone for the digital payment giant amidst ongoing regulatory challenges. The redirection of the “@Paytm” handle to YES Bank and the involvement of prominent banking partners signify a concerted effort to ensure seamless transaction experiences for users and merchants. With Morgan Stanley expressing optimism and projecting a substantial upside potential, investors are keenly observing Paytm’s trajectory as it navigates through evolving regulatory landscapes and seeks to capitalize on emerging opportunities in the digital payments ecosystem.
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