Paytm Shares Surge 3% After Getting Nod For Downstream Investment In Payment Service Unit

Shares of Paytm were upbeat on Thursday after the government approved the company to downstream investment into payments vertical.

What Happened: In a regulatory filing post the market hours on Wednesday, Paytm said that the Ministry of Finance gave approval for Paytm for downstream investment into Paytm Payments Service, a wholly owned subsidiary of the company. 

After this approval, Paytm said it would resubmit its payment aggregator (PA) license application. The company said the payment service arm will continue providing payment aggregator service to existing clients. 

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Brokerage Views: Jefferies had a "hold" call on Paytm with a target price of ₹420. The brokerage said the immediate business impact would be marginal and sees the diminishing regulatory concerns as positive for the company. The company has to get approval from the Reserve Bank of India and the National Payments Corporation of India for new user onboarding, the research firm added.

Morgan Stanley kept a "equal-weight" call on Paytm with a target price of ₹500. The brokerage said it reduces the regulatory overhang incrementally and will track the central bank’s response to the next steps. 

Price Action: Shares of Paytm rose 3.06% to ₹554.45 on Thursday morning. 

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