The Reserve Bank of India (RBI) has officially cancelled the license for Paytm Payments Bank (PPBL), effectively prohibiting it from conducting any business defined as 'banking'. This follows an earlier RBI directive in January 2024 that had already restricted most of PPBL's services, allowing only withdrawals.
Paytm's Relationship with PPBL
One 97 Communications Ltd, the parent company of Paytm, held a 49 percent stake in PPBL. However, Paytm had fully impaired its investment in PPBL in early 2024 and currently derives no revenue from PPBL's operations. Furthermore, Paytm successfully migrated its UPI operations from PPBL to a third-party application provider license from the NPCI in March 2024 and decoupled other services from PPBL throughout 2024. Paytm and PPBL have also had no common management or board members for the past two years.
Analyst Views on Stock Impact
Despite the severity of the RBI's order, most financial analysts believe the direct financial and operational impact on One 97 Communications will be minimal. Firms like Goldman Sachs, Emkay Global, and Jefferies highlight that Paytm has largely ring-fenced itself from PPBL's issues. Goldman Sachs noted, however, that the common brand might lead to short-term impacts on customer and merchant acquisition or churn.
"Paytm has talked about potential relaunch of a wallet, which would require the company to obtain a Prepaid Payment Instrument license from the RBI. It remains to be seen if the RBI’s action on PPBL has any implications for Paytm’s potential PPI license application." - Goldman Sachs
Emkay Global stated that commercial agreements with PPBL were terminated, and the equity investment was fully impaired by March 2024, leading them to see no financial or operational impact. Jefferies reiterated that all of Paytm's services continue to be operational.
Bernstein acknowledged the regulatory action as an incremental negative development but noted that Paytm had put significant effort into terminating interlinkages, reconstituting the board, and separating its core business from the payments bank. They also anticipate no impact on Paytm's numbers, as PPBL's operations have been suspended for over a year, and the investment has been written off.
Paytm Q4 Results Preview and Target Prices
One 97 Communications has not yet officially announced the date for its Q4 and full financial year results ending March 31, 2025, but it is expected to be in the first half of May 2026.
Q4 Expectations:
- Goldman Sachs: Anticipates continued gains in consumer and merchant market share, leading to a 26 percent year-on-year GMV growth. However, they forecast a deceleration in revenue growth to 14 percent year-on-year due to the absence of PIDF incentives.
- YES Securities: Projects 6.4 percent quarter-on-quarter growth in Payments Services Revenue and 8 percent quarter-on-quarter growth in Financial Services and others, leading to an overall revenue growth of 3.4 percent quarter-on-quarter.
- Motilal Oswal Financial Services: Expects flat revenue growth in Q4, with contribution margins remaining steady at 56 percent and healthy GMV growth (4 percent quarter-on-quarter).
Analyst Ratings and Target Prices:
- Bernstein: 'Outperform' rating with a target price of Rs 1,500. They believe the development clears the way for Paytm to apply for NBFC or PPI licenses.
- Goldman Sachs: 'Buy' rating with a trimmed target price of Rs 1,400.
- Emkay Global: 'Buy' rating with a target price of Rs 1,500. They find valuations attractive at 29.8 times FY28E EV/Ebitda and 35.1 times FY28E P/E.
- Jefferies: 'Buy' rating with a target price of Rs 1,350.
- YES Securities: 'Buy' rating with a target price of Rs 1,300.
- Motilal Oswal: 'Neutral' rating with a target price of Rs 1,150.
Paytm shares have shown volatility, remaining range-bound recently. While down nearly 19 percent from their 52-week high in December 2025, the stock has gained nearly 18 percent in the last month and has tripled investor wealth over the past two years.