After kirana stores stopped dancing to the jingle of ‘Paytm Karo’ and RBI showed reluctance to change its stance on Paytm Payments Bank, shares of One 97 Communications on Wednesday tumbled up to 9% to day’s low at Rs 344.90 on BSE. In the last 10 trading days since the RBI ban was announced, the stock has lost about 55% of its value or Rs 26,000 crore in market capitalisation.

Global broking firm Macquarie, which has shared a love-hate relationship with Paytm stock, has downgraded the new-age stock to underperform with a target price going as low as Rs 275.

A year ago, Macquarie had given the stock a double upgrade with a target price of Rs 800. In 2022, the target price was Rs 450 with an underperform rating.

Now Macquarie has changed its stance once again saying the Vijay Shekhar Sharma-led company is fighting for survival and after the recent diktats, Paytm faces a serious risk of customer exodus which significantly jeopardises its monetisation and business model.

“We cut revenues sharply as we reduce both payments and distribution business revenues (60-65% over FY25/26E). Moving payment bank customers to other bank accounts or moving related merchant accounts to other bank accounts will require KYC (Know your customer) to be done again based on our channel checks with partners, indicating that migration within RBI’s Feb 29th deadline will be an arduous task,” Macquarie analyst Suresh Ganapathy said.

Following a ban imposed on Paytm Payments Bank, which also houses the Paytm wallet, Reserve Bank of India (RBI) Governor Shaktikanta Das has said that there is hardly any room to review the actions.Market experts have advised retail investors to refrain from catching the falling knife till the regulatory challenges settle down.”RBI has been guiding the company very strongly in the last few years and the company has been a constant violator. Given the kind of penalties that have been levied on the company, the entire business model has been disrupted. We just like to stay far away from that stock as much as possible,” said Vinit Bolinjkar of Ventura Securities.

Channel checks done by Macquarie show that lending partners are re-looking at their relationship with Paytm which eventually could lead to a decline in lending business revenues in case partners scale down or terminate their relationship with Paytm.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times)

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