Paytm shares continued to bleed, buying and selling 9 per cent additional down early on February 14, and slipping under Rs 350 mark, as disaster regarded removed from over for mother or father One97 Communications.
In the final 10 buying and selling days for the reason that RBI ban was introduced, the inventory has misplaced about 55% of its worth or Rs 26,000 crore in market capitalisation.
Shares of One 97 Communications has misplaced over 80 per cent of its worth or Rs 1.17 lakh crore in market capitalisation in 27 months. The inventory is now 84 per cent away from its IPO value of Rs 2,150.
The RBI positioned restrictions on Paytm Payments Bank Ltd (PPB), an affiliate firm of One97 Communications, saying the actions had been warranted by “persistent non-compliances and continued material supervisory concerns in the bank”.
The regulator discovered main irregularities in KYC, which uncovered the shoppers, depositors, and pockets holders to severe dangers. In its probe, the regulator discovered that in 1000’s of instances, the identical PAN was linked to greater than 100 clients and in some instances to greater than 1,000 clients. The complete worth of transactions, operating into crores of rupees, is far past the regulatory limits in minimal KYC pre-paid devices, elevating cash-laundering issues.
The RBI directed PPB to cease accepting deposits, credit score transactions or high-ups in buyer accounts, pay as you go devices, wallets, FASTags, and NCMC playing cards after February 29, aside from any curiosity, cashbacks, or refunds. It additionally ordered the funds financial institution to settle all pipeline transactions and nodal accounts by March 15.
In the 2 weeks for the reason that RBI directive, overseas brokerages like CLSA, Morgan Stanley, Jefferies, Bernstein have reduce their goal costs for One 97 Communications (Paytm) by 20-60 per cent, with Macquarie the largest bear on the Street. The company has downgraded One97 Communications to ‘underperform’ and sharply reduce the goal value to Rs 275 from Rs 650.
Macquarie analyst Suresh Ganapathy believes the brand new-age inventory was combating for survival. “Post the recent regulatory changes and diktats, Paytm now faces a serious risk of an exodus of customers which significantly jeopardises its monetisation as well as its business model,” the brokerage stated.
The brokerage stated a few of Paytm’s current lending companions might take a re-have a look at their enterprise hyperlinks with the agency, which can doubtlessly harm its lending enterprise revenues.
“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. AB Capital, one of Paytm’s largest lending partners, has already pared down their BNPL exposure to Paytm from a peak level of Rs 2,000 crore to Rs 600 crore currently and is expected to go down further in our view,” it famous.
It was Macquarie, which got here out with the primary goal value on Paytm, when the scrip obtained listed again in 2021. The brokerage had then instructed a goal of Rs 1,200 on the inventory simply forward of Paytm’s itemizing.
Last yr, Macquarie had given a double improve to the Paytm inventory, elevating its goal value to Rs 800. “There is very visible change in approach of management to deliver profit”, it had famous on the time.
In 2022, the fintech large’s goal value was Rs 450 with an ‘Underperform’ ranking.
