Shares of Paytm extended losses in early trade on February 13, shedding more than 6 percent, after foreign broking firm Macquarie downgraded One97 Communications to 'underperform' and sharply cut the target price to Rs 275 from Rs 650.
Macquarie analyst Suresh Ganapathy believes that Paytm faces a serious risk of customer exodus which significantly jeopardises its monetisation and business model. The target price is a steep 33 percent lower than the previous closing price of Rs 416 for One97 Communications, which operates Paytm.
Also Read | Paytm crisis: Macquarie cuts target price by 57% to Rs 275, sees huge customer exodus
"We increase loss estimates by 170 percent/40 percent over FY25/26, factoring 60-65 percent decline in revenues due to lower payments and distribution revenue," Ganapathy wrote in his report.
As of 9.25am, Paytm shares were quoting Rs 396.6 on the NSE, lower by 6.06 percent and under the key Rs 400-mark. Since January 31, when the RBI directed Paytm Payments Bank to put restrictions on Paytm, shares of the firm have fallen around 48 percent.
On February 12, Paytm operator One97 Communications’ board formed a Group Advisory Committee chaired by former Sebi chief M Damodaran to work towards strengthening the compliance and regulatory matters. The development comes after the RBI on January 31 imposed major business restrictions on Paytm Payments Bank, citing prolonged non-compliance to prudential regulations.
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On January 31, the RBI asked the digital lender to stop accepting deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, and NCMC cards after February 29. This is excluding cashbacks, or refunds.
The RBI has also directed the payments bank to settle all pipeline transaction and nodal accounts by March 15. But sources have told Moneycontrol that the Reserve Bank of India (RBI) is considering cancelling the licence of Paytm Payments Bank after the deadline.
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