On Monday, Jio Financial Services Ltd (JFS) surged more than 14% intraday amid speculations that the conglomerate and India's biggest private bank HDFC Bank are looking to buy the wallet business of Paytm, after the RBI’s diktat against PPBL.

The RBI in its January 31 order PPBL to stop taking new customers with immediate effect, while it barred the company from taking further deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29.

As per the company, the RBI’s action is likely to have a worst case impact of ₹300-₹500 crore on its annual EBITDA going forward. However, it expects to continue on its trajectory to improve its profitability.

Post the RBI action, Jefferies downgraded the stock to 'Underperform' and cut the target price by more than half to ₹500 from ₹1,050 per share. Another foreign brokerage Macquarie lowered its target price to ₹650 per share, while retaining a 'neutral' stance on the stock, saying that there is no near-term solution to Paytm's problems.

For the third quarter ended December 31, 2023, Paytm reported a reduction in losses and a significant jump in revenue, driven by strong performance of the payment services vertical amid an increase in gross merchandises value (GMV) of non-UPI instruments like EMI and cards; increase in payment processing margins on non-UPI instruments; and online sales during festive season.

In Q3 FY24, revenue from the payment business grew by 45% YoY to ₹1,730 crore, while profitability improved with net payment margin expanding 63% YoY to ₹748 crore. As of December 2023, merchant subscriptions were 1.06 crore, while it deployed 14 lakh devices, earning ₹100 to ₹500 per month per device.

Overall, the Noida-headquartered fintech major reported a net loss of ₹222 crore in Q3 FY24, narrowing by ₹170 crore year-on-year from ₹392 crore loss in the year-ago period. The revenue grew 38% to ₹2,851 crore in the third quarter compared to ₹2,062 crore in the same period last fiscal.

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Paytm wallets

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