Paytm Faces “Serious Risk” of Customer Exodus
Brokerage firm Macquarie downgraded Paytm (One97 Communications) to “Underperform” on Tuesday, citing concerns about potential customer exodus following recent regulatory actions by the Reserve Bank of India (RBI). This move comes alongside a significant slashing of the target price to Rs 275, the lowest among all brokerages.
Downgrade Echoes Listing Day Jitters
Interestingly, this isn’t Macquarie’s first time expressing such concerns. The firm had previously downgraded Paytm and reduced its target price on the day of the company’s initial public offering (IPO), contributing to a lower opening stock price.
RBI Crackdown Weighs Heavy
Paytm’s stock has witnessed a 40% decline in the last month alone, largely attributed to the impact of the RBI’s recent regulatory actions. These actions included restrictions on onboarding new prepaid payment instrument (PPI) customers for a specific period.
Macquarie Warns of Revenue Decline
In its latest note, Macquarie highlights the “serious risk” of customer exodus Paytm faces, potentially jeopardizing its monetization strategy and overall business model. The firm has increased its loss estimates by 140% for FY25 and 40% for FY26, accounting for a potential 60-65% decline in revenues due to lower payments and distribution income.
Lending Partners Reassessing Relationships
Macquarie’s research suggests that some lending partners are reevaluating their relationships with Paytm. This could lead to a further decline in lending business revenues if these partnerships are scaled down or terminated.
RBI Holds Firm on Decision
During a recent press conference, the RBI Governor, alongside the Finance Ministry, reiterated that there is no room for reviewing the deadline or decision taken regarding Paytm.
Paytm Stock Performance
Paytm’s share price closed at Rs 422 on the NSE on Monday. However, the recent downgrade and ongoing regulatory concerns could further impact the stock in the coming days.
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