Paytm shares tumbled 10% on Thursday, June 12, 2025, hitting a low of Rs 864.20. This sharp decline followed speculation that the Indian government might reintroduce the Merchant Discount Rate (MDR) on UPI payments. However, the Finance Ministry quickly dismissed these reports as “false, baseless, and misleading,” reaffirming that no MDR has been imposed on UPI.
What is MDR and Why Does it Matter to Paytm?
MDR is a fee banks charge merchants for processing digital transactions. Before 2020, merchants paid MDR on card payments, but the government waived it for UPI to encourage digital adoption. For payment service providers like Paytm, MDR is a crucial revenue stream. Reintroducing it would boost their earnings and incentivize growth in consumer payments. Conversely, its continued absence puts pressure on the financial sustainability of these platforms, as they bear the costs of facilitating UPI transactions.
Is There More Downside for Paytm Shares?
Technical analysts have mixed views on what’s next for Paytm:
- Bearish Signals: Some analysts believe the stock looks bearish. Immediate support is seen around Rs 900-880.
- Potential Further Drop: Kkunal V Parar of Choice Broking suggests investors avoid the stock for now, as it could slide to the Rs 815-820 range. He advises considering a purchase if it reaches these levels.
- Resistance and Targets: Osho Krishan of Angel One points to Rs 900-880 as intermediate support, with the Rs 920-950 gap likely to obstruct any upward movement. Sebi-registered analyst AR Ramachandran warns that a daily close below Rs 864 could lead to a near-term target of Rs 808.
Key Financial Indicators
- Moving Averages: Paytm is trading below its 5-day and 10-day Simple Moving Averages (SMAs) but above its longer-term SMAs (20-day, 30-day, 50-day, 100-day, 150-day, and 200-day).
- RSI: The 14-day Relative Strength Index (RSI) is at 51.58, indicating a neutral position.
- Valuation: The company has a negative price-to-earnings (P/E) ratio of 74.45 and a negative Earnings Per Share (EPS) of (-)12.15. Its Return on Equity (RoE) is also negative at (-)6.05.
- Volatility: With a one-year beta of 1.3, Paytm is considered a highly volatile stock.
What’s the Takeaway?
While the initial crash was due to a disproved rumor, the technical outlook suggests Paytm shares could face further downward pressure in the short term, with potential support levels around Rs 815-820. The high volatility and negative profitability metrics also signal inherent risks. The market’s reaction underscores how sensitive fintech stocks are to regulatory news, even speculative, especially concerning their revenue models.