Macquarie dramatically reduce its 12-month worth goal on One97 Communications Ltd., the dad or mum firm of digital funds agency Paytm, citing heightened regulatory scrutiny. Macquarie, which famously predicted the droop at Paytm earlier than the itemizing, lowered its goal to 275 rupees ($3.3), essentially the most brutal by any main brokerage agency.
Paytm, which ended the Monday buying and selling session at 419.85 Indian rupees, is reeling from the Indian central bank’s clampdown. The Reserve Financial institution of India lately ordered Paytm to all however shut down Paytm Funds Financial institution, an affiliate of Paytm that processes all its transactions.
The analyst group, led by Suresh Ganpathy, wrote in a word Tuesday that it believes Paytm will see a pointy discount in revenues and the regulatory crackdown poses a “serious risk of exodus of customers.” At 275 rupees, Paytm’s market cap would have shrunk to about $2.1 billion.
“We cut revenues sharply as we reduce 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.”
Paytm — which makes most of its cash by lending — can also be more likely to face challenges retaining its lending companions, Macquarie added. “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. AB Capital, one of PayTM’s largest lending partners, has already pared down their BNPL exposure to PayTM from a peak level of Rs20bn to Rs6bn currently and is expected to go down further in our view.”
India’s central financial institution final week stated it takes supervisory actions and imposes enterprise restrictions solely after “persistent non-compliance” with guidelines, its first remark after a clampdown on Paytm final week has posed existential questions on the way forward for the main monetary providers agency.
Shaktikanta Das, the Reserve Financial institution of India (RBI) governor, stated the central financial institution all the time engages with regulated entities bilaterally and nudges them to take corrective motion. If the central financial institution takes actions, “it is always proportionate to the gravity of the situation,” stated Das in a media briefing. “All our actions, being a responsible regulator, are in the best interest of systemic stability and protection of depositors’ or customers’ interest,” he added.
