Paytm's Stock Surges as RBI Directs Migration of UPI Users

In a welcome development for One97 Communications (OCL), the parent company of Paytm, its stock surged by 5% to reach Rs 428.10 on the National Stock Exchange (NSE) on Monday.

This uptick in Paytm’s stock price came after the Reserve Bank of India (RBI) issued a directive to the National Payments Corporation of India (NPCI) on Friday. The RBI instructed NPCI to explore the possibility of migrating Paytm Payments Bank (PPBL) customers, identified by the UPI handle ‘@paytm’, to four or five other banks.

Analysts see this move as a strategy to ensure a smooth transition for PPBL users to alternative banking partners. The primary aim is to minimize inconvenience for users, with Paytm expected to face minimal volume loss.

Bernstein has set a target price of Rs 600, indicating a potential upside of 40%, viewing the recent developments positively. Similarly, Goldman Sachs and Morgan Stanley have also expressed optimism, with target prices of Rs 450 and Rs 555 respectively.

Morgan Stanley analysts highlight the dominance of PhonePe and Google Pay in the UPI market, with PPBL holding an 11% share. They emphasize the importance of NPCI’s approval for a seamless migration of Paytm’s UPI customers.

Approximately 10% of Paytm users, whose PPBL bank accounts are linked to UPI, need to shift to a different bank by March 15 for uninterrupted services.

Despite recent lows, Paytm has rebounded by 35% from its February 16 low, following a 52-week high in October 2023.