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Macquarie returns to become Paytm’s biggest bear and sees another 34% downside

Shares of One97 Communications, which owns and operates digital payments firm Paytm, hit a record high on Tuesday after global brokerage Macquarie cut its 12-month price target for the new age stock, citing monitoring increased regulation. At 9:30 a.m., the stock was trading down 6.22% at 395.95 each on the NSE.

While attributing the downgrade to recent diktats, Macquarie analyst Suresh Ganapathy said Paytm faced a serious risk of customer exodus, significantly jeopardizing its monetization and business model.
The brokerage downgraded its rating on the stock to “underperform” from “neutral” and also lowered its stock price target accordingly to 275 of 650 earlier. HAS 275, Paytm’s market capitalization would have fallen to around $2.1 billion.

The Macquarie analyst believes that Paytm will see a sharp reduction in revenue. “We have significantly reduced our revenue by reducing both payment and distribution business revenue (60-65% compared to FY25/26E). Moving payment bank customers to other bank accounts or moving associated merchant accounts to other bank accounts will require KYC (know your customer). to be redone based on our channel checks with our partners, indicating that migration before RBI’s February 29 deadline will be an arduous task,” the note said.

Explaining the reasons for Macquarie’s downgrade and Paytm’s target price cut, Suresh Ganapathy told CNBC-TV18, “Paytm’s business model is being questioned due to uncertainty over lending business. Banks reduce their loan exposure to Paytm.”

Macquarie was the first brokerage to issue a bearish rating on Paytm during its listing in late 2021. After several downgrades, the brokerage finally upgraded the stock to ‘Neutral’ before downgrading it again.

“No review of Paytm Payments Bank decision”

Paytm is currently reeling from the Reserve Bank of India (RBI) crackdown. RBI Governor Shaktikanta Das on Monday asserted that there would be no review of the central bank’s recent measures against Paytm Payments Bank (PPBL), saying the decision was taken after a thorough assessment of the functioning of the lender.

Speaking to the media after the Reserve Bank of India’s central board meeting, Das categorically said: “At the moment, let me make it very clear that there is no review of this decision (PPBL). If you are waiting for a review of the decision, let me make it very clear that there will be no review of the decision.”

Governor Das stressed that decisions regarding entities regulated by the central bank are taken after careful assessment. While expressing support for the fintech sector, he reiterated RBI’s commitment to protecting customer interests and ensuring financial stability.

The central bank is expected to release a set of frequently asked questions (FAQs) regarding the Paytm affair later this week. The central bank had cited persistent non-compliances and significant supervisory concerns to justify its action against PPBL.

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William Dupuy

Independent political analyst working in this field for 14 years, I analyze political events from a different angle.
Not all news on the site expresses the point of view of the site, but we transmit this news automatically and translate it through programmatic technology on the site and not from a human editor.
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