Rs 26,000 crore lost in 10 days! Paytm Payments Bank ban by RBI leaves Paytm shares gasping – Times of India
Paytm share price today: Shares of One 97 Communications, the parent company of Paytm, experienced a significant drop of up to 9% on Wednesday, reaching a low of Rs 344.90 on the Bombay Stock Exchange. This decline comes in the wake of kirana stores moving away from the ‘Paytm Karo’ campaign and the Reserve Bank of India’s (RBI) unwavering position on Paytm Payments Bank, states an ET report.
In the past 10 trading days since the RBI ban was announced, the company’s stock has lost approximately 55% of its value, amounting to a market capitalisation loss of Rs 26,000 crore.
Global broking firm Macquarie, which has had a volatile relationship with Paytm stock, has downgraded it to ‘underperform’ with a target price as low as Rs 275. Just a year ago, Macquarie had given the stock a double upgrade with a target price of Rs 800. In 2022, the target price was revised to Rs 450 with an ‘underperform’ rating.
The change in Macquarie’s stance is attributed to their belief that Paytm is currently fighting for survival. The recent regulatory measures have put the company at a serious risk of losing customers, which poses a significant threat to its monetisation and business model.
Macquarie analyst Suresh Ganapathy stated that Macquarie has significantly reduced revenue projections for both the payments and distribution businesses (by 60-65% over FY25/26E). Based on our channel checks with partners, we have found that migrating payment bank customers to other bank accounts or shifting related merchant accounts to other banks will require the completion of KYC (Know Your Customer) procedures. This indicates that meeting the RBI’s deadline of February 29th for migration will be a challenging task, he said.
Reserve Bank of India (RBI) Governor Shaktikanta Das has expressed that there is limited scope for reviewing the actions taken against Paytm Payments Bank. As a result, market experts are advising retail investors to exercise caution and avoid investing in the company until the regulatory challenges are resolved.
Vinit Bolinjkar of Ventura Securities stated that RBI has been closely monitoring the company’s activities in recent years, and Paytm has been found to consistently violate regulations. With the substantial penalties imposed on the company, its entire business model has been disrupted. Therefore, we recommend staying away from this stock as much as possible, he said.
According to Macquarie’s findings, lending partners are reconsidering their relationship with Paytm, which could lead to a decline in lending business revenues if partners choose to scale down or terminate their association with the company.
In the past 10 trading days since the RBI ban was announced, the company’s stock has lost approximately 55% of its value, amounting to a market capitalisation loss of Rs 26,000 crore.
Global broking firm Macquarie, which has had a volatile relationship with Paytm stock, has downgraded it to ‘underperform’ with a target price as low as Rs 275. Just a year ago, Macquarie had given the stock a double upgrade with a target price of Rs 800. In 2022, the target price was revised to Rs 450 with an ‘underperform’ rating.
The change in Macquarie’s stance is attributed to their belief that Paytm is currently fighting for survival. The recent regulatory measures have put the company at a serious risk of losing customers, which poses a significant threat to its monetisation and business model.
Macquarie analyst Suresh Ganapathy stated that Macquarie has significantly reduced revenue projections for both the payments and distribution businesses (by 60-65% over FY25/26E). Based on our channel checks with partners, we have found that migrating payment bank customers to other bank accounts or shifting related merchant accounts to other banks will require the completion of KYC (Know Your Customer) procedures. This indicates that meeting the RBI’s deadline of February 29th for migration will be a challenging task, he said.
Reserve Bank of India (RBI) Governor Shaktikanta Das has expressed that there is limited scope for reviewing the actions taken against Paytm Payments Bank. As a result, market experts are advising retail investors to exercise caution and avoid investing in the company until the regulatory challenges are resolved.
Vinit Bolinjkar of Ventura Securities stated that RBI has been closely monitoring the company’s activities in recent years, and Paytm has been found to consistently violate regulations. With the substantial penalties imposed on the company, its entire business model has been disrupted. Therefore, we recommend staying away from this stock as much as possible, he said.
According to Macquarie’s findings, lending partners are reconsidering their relationship with Paytm, which could lead to a decline in lending business revenues if partners choose to scale down or terminate their association with the company.
