The rating of Paytm has been cut by Macquarie to its lowest level ever

Tuesday saw a 10% decline in shares of One97 Communications, the parent company of Paytm, to a career low of Rs 380.15 on the National Stock Exchange following a reducing by brokerage Macquarie Capital Securities from “Neutral” to “Underperform.”

The firm has also cut its price estimate for the stock, which was Rs 650, to Rs 275 due to the significant decline in revenue across all segments. According to Macquarie Capital, Paytm faces a considerable risk of customer exodus following the new directive from the Reserve Bank of India, which puts its business model and monetisation at serious danger.

As of right now, the corporation has 110 million monthly transacting users and 330 million clients. 10.6 million merchants are subscribed to its network.

The company’s payments bank unit was under to new restrictions by the RBI on January 31, which required it to stop several of its major activities after February 29. At least three banks that are able to accept payments and settlement loads from Paytm’s payments bank are in discussions with the company.

On February 1st, the stock had dropped fifty percent. From Rs 41,016 crore on January 1 to Rs 24,145 crore on February 13, the market capitalization decreased.

Shaktikanta Das, the governor of the Reserve Bank of India, ruled out reviewing the central bank’s move against the payments bank on Monday. The investor mood has been further depressed by these remarks.

“We have conducted channel checks with certain lending partners and found that they are reviewing their partnership with Paytm. If partners decide to reduce or end their relationship with Paytm, this could ultimately result in a drop in lending business revenues,” the report stated.

Aditya Birla Capital, the company’s prominent lending partner, has reduced its exposure to Paytm’s buy-now pay-later (BNPL) loans from Rs 2,000 crore to Rs 600 crore. Aditya Birla Capital is expected for the brokerage to further decrease its exposure to BNPL.

Many of the company’s NBFC partners are exploring for alternatives to Paytm for the payment of loans, according to a Reuters article earlier on Tuesday. Analysts estimate that loan distribution fees accounted for 25% of the company’s revenue in the December quarter.

The brokerage stated, “We factor in a 60–65% decline in distribution revenues, resulting into a 170%/40% increase in loss estimates over FY25E/26E.”

Furthermore, KYC would need to be completed again when transferring associated merchant accounts or payment bank customers to other accounts, indicating that the migration within the RBI’s deadline of February 29 will be a difficult undertaking.