Shares of Vijay Shekhar Sharma-led fintech major Paytm hit 10% upper circuit at ₹381.20 on the BSE today, primarily due to a revision in the circuit filter. The rise in the share price came after the circuit filter for Paytm operator One97 Communications Ltd. was revised from 5% to 10%. The scrip opened a gap up at 349.10 today and surged to an intra-day high of ₹381.20, taking the company's m-cap to ₹24,236.41 crore. 

The shares of One97 have seen a major erosion in value after the RBI's stringent action against its former associate entity, Paytm Payments Bank, on January 31, 2024. The central bank had barred Paytm's erstwhile associate entity Paytm Payments Bank from onboarding new customers and imposed several business restrictions on its services. 

The scrip has fallen 47.55% in the past year; 40.98% in the year-to-date period; and 42.35% in the past six months. The share price, however, has surged 14.21% in the past month and 0.67% in one week. The Paytm shares are currently trading 61.8% down as compared to 52-week high of ₹998.30 touched on October 20, 2023.

In terms of quarterly earnings, the Paytm parent’s losses widened to ₹550 crore for the quarter ended March 31, 2024, compared with ₹167 crore in the year-ago period. The company attributed the losses to the impairment of ₹227 crore towards the carrying value of Paytm's investment in Paytm Payments Bank. The digital payments firm's revenue fell 3% YoY to ₹2,267 crore during Q4 FY24 against ₹2,334 crore in Q4 FY23.

The company said its fourth-quarter results were impacted by temporary disruption on account of UPI transition and permanent disruption because of the banking regulator’s restrictions on Paytm Payments Bank. 

Paytm founder Sharma owns around 19% stake in One 97 Communications. Its other largest shareholders include venture capital firm Elevation Capital, which owns a 15% stake and Alibaba's Antfin which holds a 10% stake.

In the UPI ecosystem, Paytm competes with Walmart's PhonePe and Alphabet's Google Pay. The latest National Payments Corporation of India (NPCI) data shows Paytm accounted for 8.1% of the total UPI transactions in May 2024. 

Analysts say Paytm holds a significant share in both retail payments (10%) and the merchant category (40%). It leads in digital lending and has partnerships with many NBFC’s and banks. They believe though the cancellation of banking licence poses a challenge, and may delay its path to profitability to 2026, the cut in Chinese ownership could ease the regulatory issues.

On May 25, 2024, Paytm said its wholly-owned subsidiary, Paytm Insurance Broking Private Ltd. (PIBPL), has intensified its focus on insurance distribution to Paytm consumers and small merchants & SMEs. The company aims to offer small ticket, innovative insurance solutions across various general insurance categories, including health, life, motor, shop, and gadgets, the company says.

The company also said that Paytm General Insurance Ltd (PGIL), an associate entity of One97 Communications, will be moving its focus away from the capital-intensive insurance manufacturing business and withdrawing its general insurance license application. "This will also enable OCL to conserve cash of INR 950 crores, which was earmarked for investment in PGIL," the company said. 

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