Breaking News
Mumbai, August 29: The recent government approval for One 97 Communications to make a downstream investment in its payments division and wholly owned subsidiary, Paytm Payments Services Limited (PPSL), has renewed optimism among global brokerage firms.
This approval is anticipated to support Paytm's recovery and growth as it advances to the next phase of its operations.
Global brokerages such as Citi, UBS, and Ventura Securities have highlighted in their reports that this approval eliminates regulatory concerns and positions Paytm for a strong rebound. They see it as a significant step towards future expansion and a return to growth.
On August 27, Paytm announced that it had received approval from the Ministry of Finance for its downstream investment into PPSL. The company stated, "With this approval, PPSL will move forward with resubmitting its PA application. In the interim, PPSL will continue to offer online payment aggregation services to existing partners. We remain committed to compliance and upholding high regulatory standards. As a homegrown Indian company, Paytm is dedicated to advancing the Indian financial ecosystem."
This approval is viewed as a step towards resuming new online merchant acquisitions, which had been paused since November 2022 due to regulatory restrictions.
Citi Research noted that the approval addresses ownership-related issues, with the company now needing to obtain a payment aggregator license from the RBI before resuming new online merchant acquisitions.
UBS echoed this sentiment, stating that the regulatory approval removes a major obstacle and boosts market confidence, marking an important step towards obtaining the necessary license.
Morgan Stanley commented, "We believe this approval incrementally reduces regulatory concerns and will monitor the RBI's response to subsequent steps." Brokerages remain positive about Paytm's prospects due to its strong business model and advanced technology.
Ventura Securities emphasized Paytm's extensive merchant base, noting that it creates a solid ecosystem for recurring revenue streams. They also pointed to the rising adoption of Unified Payments Interface (UPI) and the importance of Paytm's soundbox and point-of-sale (POS) systems, which have become crucial tools for digital payments.
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