Paytm shares surge 5% as FinMin approves investment in payment arm

Shares of Paytm operator One97 Communications gained 5% after the Ministry of Finance approved the company's downstream investment in its payment arm. One97 Communications informed via an exchange filing that following this approval, its wholly-owned subsidiary Paytm Payments Services (PPSL) will resubmit its application for a payment aggregator licence to the Reserve Bank of India (RBI).

“With this approval in place, PPSL will proceed to resubmit its PA application. In the meantime, PPSL will continue to provide online payment aggregation services to existing partners,” One 97 Communications (OCL) said in its press statement.

Paytm shares are trading at ₹542 currently, up 1% from the previous close of ₹538 on the NSE. The stock opened at ₹559 and peaked at ₹564.80, a 4.98% increase from yesterday. The company’s market capitalisation is ₹34,492 crore. Although the shares have outperformed the benchmark Nifty Midcap 100 index today, which is down nearly 1% to 58,639.85, the stock has fallen 35% over the past year and 13% year-to-date. Brokerages such as UBS have issued 'hold' or 'buy' ratings, contributing to today’s positive performance.

Downstream investment refers to an investment in the equity instruments or capital of an Indian entity by another Indian entity that has previously received foreign investment or is classified as an Investment Vehicle, as per the Reserve Bank.

“We remain committed to a compliance-first approach and upholding the highest regulatory standards. As a homegrown Indian company, Paytm is focused on contributing to and advancing the Indian financial ecosystem,” the company added.

Recent years have been challenging for One 97 Communications, the parent company of Paytm, due to intense scrutiny from India’s banking regulator and financial crime agencies. In January, the Reserve Bank directed the company to wind down its payments bank, immediately halting new customer onboarding.

The fintech major reported a net loss of ₹840 crore in the first quarter of this financial year, up from ₹357 crore a year earlier, largely due to the RBI's restrictions. Led by Vijay Shekhar Sharma, the company saw its revenue fall by 36% to ₹1,502 crore in Q1 FY25, down from ₹2,342 crore in the same period last year.