Paytm crash wipes off ₹1.17 lakh crore of investors' wealth in 27 months

Digital payments start-up Paytm shares went deeper into the red, tumbling another 10% in trade Wednesday to hit a new all-time low of ₹342.15 apiece on the BSE. Shares of One 97 Communications has lost over 80% of its value or ₹1.17 lakh crore in market capitalisation in 27 months. The stock is now 84% away from its IPO price of ₹2,150.

A day earlier, the fintech stock crashed 10% after global brokering firm Macquarie downgraded its rating on the counter to ‘Underperform’ with a target price of ₹275, citing a sharp reduction in revenues across various business segments after the central bank’s recent decision barring subsidiary Paytm Payments Bank to stop offering its key services after February 29.

Paytm crash wipes off ₹1.17 lakh crore of investors’ wealth in 27 months

Macquarie analyst Suresh Ganapathy believes the new-age stock was fighting for survival. “Post the recent regulatory changes and diktats, Paytm now faces a serious risk of an exodus of customers which significantly jeopardises its monetisation as well as its business model,” the brokerage said.

The brokerage said some of Paytm’s existing lending partners may take a re-look at their business links with the firm, which may potentially hurt its lending business revenues.

“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 ₹2,000 crore to ₹600 crore currently and is expected to go down further in our view,” it noted.

It was Macquarie, which came out with the first target price on Paytm, when the scrip got listed back in 2021. The brokerage had then suggested a target of ₹1,200 on the stock just ahead of Paytm’s listing.

Last year, Macquarie had given a double upgrade to the Paytm stock, raising its target price to ₹800. “There is very visible change in approach of management to deliver profit”, it had noted at the time.

In 2022, the fintech giant’s target price was ₹450 with an ‘Underperform’ rating.

Speaking to CNBC-TV18, Sudip Bandyopadhyay of Inditrade Capital said, “As far as Paytm is concerned, it’s definitely avoidable. I told you last time when we interacted that it’s a falling knife, let’s not catch it. It’s impossible to transition, more than a crore customers in next 15-20 days to a bank or other institutions where they have to do the complete KYC. So, I think it’s a pretty pathetic situation as far as Paytm is concerned. unfortunate, but that’s the reality so it’s complete avoid.”

About 40% of analysts tracking Paytm have a ‘Buy’ rating on the counter, 20% recommends ‘Hold’. The Paytm stock also has 40% ‘Sell’ call, according to data from Bloomberg.

Paytm made one of the worst major Indian stock market debuts in 2021 as its shares fell more than 27% after listing.

Shares of Paytm are currently trading 8.89% lower at ₹346.35.