Brokerage firm Macquarie has downgraded Paytm to ‘underperform’ and sharply cut its target price to Rs 275 from Rs 650 citing a serious risk of customer exodus which “significantly jeopardises its monetisation and business model”.

The downgrade comes in the wake of the recent regulatory action on Paytm Payments Bank by the Reserve Bank of India. In a January 31 order, the RBI barred Paytm Payments Bank from offering banking services after February.

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Paytm’s stock was down 5.73% to Rs 398.40 on the BSE in early morning trade.
Macquarie, in its note, said it is also cutting revenue estimates sharply by reducing both payments and distribution business revenues (60-65% over FY25/26E).

“Moving payment bank customers to another bank accounts or moving related merchant accounts to other bank accounts will require KYC (Know your customer) to be done again based on our channel checks with partners, indicating that migration within RBI’s Feb 29th deadline will be an arduous task,” the brokerage said.

On February 12, the RBI governor Shaktikanta Das said there is “hardly any room for review” of the central bank’s decision against Paytm Payments Bank. Das said the RBI takes action against regulated entities “only after a comprehensive assessment.”

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“Our channel checks with some lending partners reveal that they are re-looking at their relationship with Paytm which eventually could lead to a decline in lending business revenues in case partners scale down or terminate their relationship with Paytm,” the brokerage further said in its note. It also added that AB Capital, one of Paytm’s largest lending partners, has already pared down their BNPL exposure to Paytm from a peak level of Rs20 billion to Rs 6 billion currently and is expected to go down further in our view.

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