Foreign brokerage Macquarie Capital Securities has once again cut the target price of Paytm parent One97 Communications to ₹450, 36% down from ₹700 it predicted last month.

The stock tanked 71% from its issue price of ₹2,150 earlier this week, taking the Vijay Shekhar Sharma-led company's market capitalisation below ₹40,000 crore.

While retaining its underperform rating on the stock, the brokerage said its valuation for the digital payments firm is based on the valuation of global fintech firms.

Suresh Ganapathy, who tracks the stock at Macquarie, has been bang on with his price targets for One97 Communications ever since the company made a dismal public market debut on November 18, 2021.

"We believe, to gain scale and size, fintechs need to go beyond distribution and lend, for which they need licences. With the RBI recently raising issues with Paytm Payments Bank and Chinese ownership being 25% or more, we believe the probability of Paytm getting a banking licence is significantly lower now, thereby impeding its ability to lend," the analyst said.

Ganapathy, however, didn't change his earnings or revenue estimates for Paytm.

The average 12-month price target among nine analysts covering Paytm is ₹1,203, according to Bloomberg data.

On the day Paytm got listed, Ganapathy was blunt in his initiating coverage note titled, "Too many fingers in too many pies". The analyst stated that the dabbling in multiple business lines prevents Paytm from being a category leader in any business except wallets, which is becoming inconsequential given UPI's meteoric rise as a digital payments alternative.

The Reserve Bank of India (RBI) last week barred Paytm Payments Bank from onboarding new customers citing "material supervisory concerns". The banking regulator had directed Paytm Payments Bank to appoint an IT audit firm to conduct a comprehensive system audit of its IT system. Onboarding of new customers by Paytm Payments Bank will be subject to specific RBI approval after reviewing the IT auditors' report, the banking regulator said.

The company has denied any data leak to Chinese entities and confirmed that all data resides within India. "The company would like to update that it has been informed by its associate, Paytm Payments Bank Limited (PPBL), that the regulator has not expressed any concerns regarding data leak or access shared with any Chinese firms. PPBL's data servers are located within India and it proudly supports data localization," it said.

Refuting the allegations, a Paytm spokesperson told Fortune India, "The recent Bloomberg report on Paytm Payments Bank claiming data leak to Chinese firms is completely false and simply sensationalising. Paytm Payments Bank is proud to be a completely homegrown bank and is fully compliant with RBI’s directions on data localisation."

Paytm clarified that RBI's order does not impact any existing customers of Paytm Payments Bank. "All existing users of Paytm UPI, Paytm Wallet, Paytm FASTag, and bank accounts can continue to use these instruments, including debit cards and net banking, for payments," it said.

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