Paytm share price Drops 4% with COO's Resignation, Q4 Results Awaited

Tanushree Jaiswal 6th May 2024 - 12:52 pm

On 6-May, shares of Paytm dropped more than 4.5% following the announcement of the resignation of Bhavesh Gupta, its COO and president, through a regulatory filing over the weekend. By 9:38 am IST, Paytm shares had declined by 3.8%, trading at ₹355.25 on the National Stock Exchange (NSE). This year, the stock has seen a significant decrease of 45%, starkly underperforming compared to the benchmark Nifty, which has gained nearly 4% in the same timeframe.

The filing revealed that Bhavesh Gupta, in his resignation letter, stated his departure would take effect at the end of business on May 31, 2024. He mentioned his plan to remain involved with the company in an advisory role within the office of the chief executive. Citing personal reasons for his career break, Gupta expressed his optimism about Paytm's future, commending the strong leadership and development in the payments and financial services sectors that have been established in recent years.

“Gupta’s resignation has been accepted by the Board of Company at its meeting held on May 04, 2024, and he will be relieved from the services w.e.f. close of business hours on May 31, 2024,” One97 Communications, the parent company of Paytm said in a regulatory filing. “Gupta will continue to support the company as an Advisor in the CEO office after May 31, 2024, the fintech giant added.”

In related news, Paytm has appointed Rakesh Singh as the new CEO of Paytm Money. Concurrently, Varun Sridhar, who previously held the position, has been named the Chief Executive Officer of Paytm Services Private Limited (PSPL). Paytm Money and PSPL, both subsidiaries of the parent company One97 Communications, offer a range of financial services including stock broking, investments in mutual funds, and other wealth management products tailored for Paytm customers.

“One97 Communications Limited (OCL) that owns the brand Paytm is expanding its leadership team to build a large and profitable payment and financial services distribution business. This move is aligned with its ambition to ensure Paytm’s sustained growth across key business verticals, fostering innovation and strengthening its group structure for sustainability and regulatory compliance," Paytm said in a statement.

Bhavesh Gupta's resignation precedes the upcoming disclosure of Paytm's financial results for the March quarter of fiscal year 2024. There is widespread speculation that these quarterly results could reflect the impact of regulatory measures taken by the Reserve Bank of India (RBI) against its affiliated entity, Paytm Payments Bank Ltd (PPBL).

In the previous quarter, Paytm demonstrated robust revenue growth, largely driven by its loan distribution platform, which also represents a high-margin business. The commissions from the lending platform accounted for approximately 20% of the company's revenue and 25% of its margins. However, following the RBI's restrictions on PPBL, Paytm suspended its lending activities for over a month. This suspension is expected to have had a more significant impact on the company's revenue and profits than initially forecasted during an investor conference call.

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Tanushree Jaiswal

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