Morgan Stanley Asia recently bought a small portion, about 0.78%, of Paytm’s parent company, One97 Communications Ltd., spending over Rs 243 crore in the process. This happened through regular stock market transactions, with Morgan Stanley acquiring 50 lakh shares, as per data from the National Stock Exchange.
The value of Paytm’s shares dropped sharply, hitting a 20% lower circuit for the second consecutive day, resulting in investors losing about Rs 15,016 crore in wealth during this time. The Reserve Bank of India (RBI) identified ongoing issues with compliance and supervisory concerns at Paytm’s payments bank. In response, One97 Communications announced it would collaborate only with external banks, discontinuing its own payments bank services. Analysts monitoring Paytm’s performance have varied opinions: six recommend buying the stock, five suggest holding, and four advise selling, according to Bloomberg data. On average, their 12-month price targets predict a potential 59.5% increase in the stock’s value.
According to Bloomberg, Morgan Stanley reduced Paytm’s target price by around 20% to Rs 555, while maintaining an ‘equal weight’ rating. An important aspect to watch is how smoothly customers can transition to another bank partner, whether collectively or individually, Bloomberg cited the brokerage.
Morgan Stanley expressed concerns about regulatory uncertainties and potential challenges in execution, assigning a 45% probability to their negative scenario. At the Bombay Stock Exchange (BSE), shares of One97 Communications ended the day 20% lower at Rs 487.05 each, contrasting with a 0.61% gain in the BSE Sensex index.