Paytm stock falls 9% on Macquarie downgrade, RBI stance

One 97 Communications Ltd shares saw a further decline on Tuesday, falling as much as 9% following the RBI's denial of any possible “review” of its earlier decision related to Paytm Payments Bank and yet another downgrade by brokerage major Macquarie.

The scrip opened 5.3% down at ₹400.10 on the BSE. It fell further to an intra-day low at ₹385.75, down 9%, before settling at ₹395.45. The share is currently trading around 52-week low levels of ₹385.75, touched on October 20, 2023. The consistent fall in share price has dwindled Paytm's m-cap to ₹25,116.91 crore.

In a blow to the beaten-down stock, Australian brokerage major Macquarie further downgraded the Paytm stock, cutting its 12-month price target from ₹650 to ₹275, while rating it ‘Underperform’ from ‘Neutral’. The brokerage firm, in its latest note, thinks the regulatory crackdown could cause a huge revenue reductionfor the Vijay Shekhar Sharma-led fintech major. Also, it thinks Paytm could see an "exodus" of customers amid the uncertain future of its associate banking entity.

In another development, Governor Shaktikanta Das on Monday said there won't be any "review" of its decision regarding Paytm Payments Bank, putting an end to any chance of reprieve from the Reserve Bank of India (RBI).

He said the decision regarding Paytm Bank, which is an associate bank of fintech major One97 Communications-led Paytm Payments Services, was taken after a comprehensive assessment of its functioning. At the the 606th meeting of the Central Board of Directors of the RBI, Das said: "...there is (going to be) no review of the decision."

In an exchange filing, Paytm cleared the air around the exit of an independent director from the PPBL board. The company says she exited due to personal commitments. "This event is not deemed material for the Company and does not impact the operations/business," says Paytm.

The Board of One 97 Communications has formed a group advisory committee chaired by ex-SEBI chief M Damodaran, to work with the Board in further strengthening compliance, and regulatory matters. "The company’s management is committed to driving sustainable business growth while adhering to a regulatory and compliance framework," said Paytm.

Notably, Paytm’s payment services arm, Paytm Payments Bank (PPBL), is going through a deep crisis, and its future looks uncertain amid regulatory challenges.

The Reserve Bank of India (RBI) has directed Paytm Payments Bank to stop on-boarding new customers and barred the company from taking further deposits or credit transactions or top-ups in any customer accounts, prepaid instruments, wallets, FASTags, NCMC cards, etc. after February 29. As per the company, the RBI’s action will likely have a worst-case impact of ₹300-₹500 crore on its annual EBITDA going forward. However, it expects to continue on its trajectory to improve its profitability.

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