Nod for Paytm Payments Services to operate as an online payment aggregator could reignite its payments business, says analyst.
One 97 Communications (Paytm) shares surged nearly 5% in early trade on Wednesday after the Reserve Bank of India gave its subsidiary, Paytm Payments Services (PPSL), an in-principle approval to operate as an online payment aggregator, reversing a 2022 ban on onboarding new merchants.
The nod, however, comes with conditions: Paytm must complete a system & cybersecurity audit within six months or risk losing the approval.
SEBI-registered analyst Varunkumar Patel noted that this approval enables PPSL to resume onboarding new merchants, which is a crucial lifeline for Paytm’s core payments business.
The timing is crucial as well. This move comes days after Ant Group’s exit from Paytm, which eliminated Chinese ownership: a key hurdle in prior regulatory checks. Last week, Ant Financial sold its remaining 5.8% stake in the company for ₹3,980 crore via block deals.
Paytm Gets RBI Nod: Why It Matters
Merchant onboarding has been halted since November 2022 following the RBI’s licensing rejection. This approval marks the end of regulatory stagnation and opens growth paths for PPSL, said Patel.
Payment services account for over half of Paytm’s consolidated revenue. And resuming merchant onboarding can significantly drive volume and revenue recovery.
Bullish Bet On Paytm
Patel maintains a ‘Strong Buy’ on Paytm as the stock is showing bullish signals across multiple timeframes.
Its Relative Strength Index (RSI) stands at 65.8, indicating that momentum is solid but approaching mildly overbought territory. But there is still room for upside continuation. All key (50 and 20-day) Simple Moving Averages (SMAs) and Exponential Moving Averages (EMAs) are in buy zones, pointing to trend strength across short, mid, and long-term frames.
Patel identified support at ₹1,097–₹1,107, with resistance at ₹1,200–₹1,250. A breakout confirmed above ₹1,100, accompanied by substantial volumes, indicates technical validation.
His target price stands at ₹1,250 to be achieved by August 29. However, he cautioned on overbought risk. With the RSI nearing 70, he advised traders to monitor for signs of exhaustion.
What Is The Retail Mood?
Data on Stocktwits shows that retail sentiment turned from ‘bullish’ to ‘neutral’ a few days ago.
Paytm shares have risen 14% year-to-date (YTD).
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