Paytm’s Fresh Start?: What Does Govt’s FDI Approval Mean For The Fintech Giant?

The shares of the fintech giant One97 Communications, Paytm's parent company, on Friday (July 26) soared by 10 per cent after the company received the much-anticipated nod from the government of India for a Rs 500 million (UDS 5.97 million) investment in its key subsidiary, Paytm Payment Services.

The shares of the company closed at Rs 509.05, up by 9.99 per cent. During the intraday, the shares of the company opened at Rs 459.0, reached a high of Rs 509.05 and low of Rs 459.0.

Moreover, this is also the first time since February 8, 2024, the shares of the company have crossed the Rs 500 mark.

The markets have been keenly observing the shares of the company after it reached the Rs 800 mark earlier this year. However, due to the Reserve Bank of India (RBI) restrictions imposed on the Paytm Payment Services, the stock has struggled to regain those level.

This green light was delayed for months over the concerns of the about Chinese shareholder Ant Group’s stake. But the latest development marks a major turning points after the regulatory challenges that the company faced earlier this year.

What’s Next for Paytm?

Paytm Payment Services plays an significant role in the Paytm's business, contributing about 25 per cent to its consolidated revenue for the financial year ending March 2023. This recent approval of the foreign direct investment (FDI) proposal is expected to play a vital role by enabling its subsidiaries to resume normal operations.

The company is now expected to approach the RBI to seek a payment aggregator license, which would facilitate smoother digital transactions for retailers and merchants.

Financial highlights

The company in its Q1FY25 earning reported a sharp revenue drop of 36 per cent YoY, reaching Rs 1,502 crore. Moreover, the net loss also increased Rs 840 crore, marking it the steepest loss since its listing.