Paytm share price tanks 6% after MDR rumour gets busted

Paytm investors woke up to a rude shock. After rallying recently on hopes that the government might allow Merchant Discount Rates (MDR) on UPI transactions, the party came to an abrupt end. Markets didn’t take that lightly – Paytm’s stock plunged nearly 6 per cent intraday.

What’s happening?

The stock fell to Rs 903.2 on Thursday (June 12, 2025), its sharpest intraday drop in months. The sell-off followed a government clarification that it has no plans to introduce a Merchant Discount Rate (MDR) on UPI payments, something investors had hoped would boost Paytm’s earnings.

Why it matters

Let’s cut to the chase: without MDR, Paytm’s road to profitability looks longer. UBS has already warned that without this fee, Paytm’s adjusted profits for FY26-27 could be over 10 per cent lower than previous estimates. For a company that’s still in the red, that’s a big blow.

About the company

Paytm, operated by One97 Communications, is a major player in India’s digital payments and fintech space. It runs the Paytm app, offers merchant services, lending, insurance, wealth management, ticketing, and even mobile banking through Paytm Payments Bank. But despite its massive user base, turning a profit has been a challenge.

Paytm is still a loss-making business. With negative return ratios and no profits, traditional valuation metrics don’t offer much comfort.

Value Research Online ratings

• Overall: 3/5
• Quality: 3/10
• Growth: 8/10
• Valuation: 2/10
• Momentum: 10/10

What should investors do?

This isn’t the first time Paytm’s moved wildly on policy-related buzz, and it certainly won’t be the last. The stock remains extremely sensitive to regulatory signals. While the MDR hope rally has been wiped out, any future government move on digital payments could quickly flip the script again.

For now, the fundamentals aren’t convincing. If you’re already invested, it might be worth watching how the company builds new revenue streams, especially in lending and subscription services. But if you’re on the sidelines, tread carefully. This isn’t a stock for the faint-hearted.

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Disclaimer: This is not a stock recommendation. This story was created with the assistance of artificial intelligence and is intended for informational purposes only. Please take it with a pinch of salt and do your own research or consult a financial advisor before making investment decisions.