SUMMARY
Shares of Paytm declined nearly 9% to touch a 52-week low at INR 385.75 during Tuesday’s trading session
This comes soon after foreign broking firm Macquarie downgraded One97 Communications to ‘underperform’ and sharply cut the target price to INR 275 from INR 650
Meanwhile, the central bank’s governor Shaktikanta Das on Monday said there is “hardly any room” to review the action on the payments bank
Shares of fintech giant Paytm declined nearly 9% to hit 52-week low at INR 385.75 during Tuesday’s (February 13) trading session on the BSE.
This comes soon after brokerage firm Macquarie downgraded One97 Communications’ stock ratings to ‘underperform’ and lowered its target price to INR 275 from INR 650.
“We downgrade Paytm to Underperform and sharply cut TP to INR 275 from INR 650 driven by a sharp reduction in revenues across various segments,” Macquarie analyst Suresh Ganapathy said in a note.
On Monday, Paytm shares ended at INR 422.60 apiece, while it opened at more than 6% lower at INR 400.1 on Tuesday. At 10:45 PM, Paytm shares were trading at INR 391.55 apiece.
Due to recent regulatory changes and mandates, Paytm is at risk of losing a large number of customers, including its monthly transacting users and merchant subscription network, Ganapathy added. This threatens its ability to generate revenue and sustain its business model.
“Our channel checks with some lending partners reveal that they 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,” the analyst said.
The crisis started for the fintech major after RBI on January 31 barred Paytm Payments Bank from taking deposits, credits, or processing top-up transactions in its customer accounts for ‘persistent non-compliances’. The bank has also been barred from processing other banking services like UPI facilities and funds transfer from February 29, 2024.
Meanwhile, the central bank’s governor Shaktikanta Das on Monday said there is “hardly any room” to review the action on the payments bank.
“The decisions taken by the Reserve Bank are after due thought process…be it a bank, payment bank or cooperative bank. If we are taking action against somebody, not specifically talking about Paytm, but in general, we interact for months and years…There is hardly any room for review,” he said.
Das said the central bank provided Paytm Payments Bank one-month’s time so that customers are not inconvenienced.
