Paytm shares in 20% lower circuit post RBI restrictions, an analyst expects it to fall to ₹500

Shares of Paytm are locked in a lower circuit of 20% after the Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank on Wednesday, citing repeated non-compliance.

This is the biggest single-day drop for the stock in over a month. The stock had plunged 20% in December as well after it had announced that it would focus on larger ticket size loans and recalibrate its Buy Now, Pay Later (BNPL) business. The stock fell to lows of ₹600 before reversing to Wednesday's closing levels of around ₹760. With Thursday's drop, the stock is back to the December lows.

RBI's latest restrictions prompted brokerage firm Jefferies to downgrade the stock to "underperform" from the earlier rating of "buy." The brokerage also cut its price target on the stock to ₹500 from ₹1,050 earlier. This is the lowest price target for Paytm on the street.