Paytm's shares dropped 10% to a new record low on Tuesday, after brokerage Macquarie said the Indian payments firm faces "an arduous task" to shift customers to other banks by the central bank-set February-end deadline.
The Reserve Bank of India (RBI), on Jan. 31, ordered Paytm affiliate Paytm Payments Bank to shut most of its business, including deposits, credit products and its popular digital wallets, by Feb. 29, citing "persistent non-compliance."
Since then, Paytm has lost nearly 50% of its market value, resulting in roughly $3 billion of its shareholder wealth. It hit a record low of 380.10 rupees earlier in the day, its fifth such instance since the clamp down.
However, Macquire's price target of 275 rupees -- the lowest among the 14 analysts covering the stock -- indicates prices could drop another 28%.
Meeting the deadline to shift customers would be "arduous" as customers will need to submit Know Your Customer (KYC) and other such details again, analyst Suresh Ganapathy wrote in a note.
Paytm faces a "serious risk of exodus of customers" and with lending partners also re-evaluating their relationship with the firm, that could lead to a decline in lending business revenue, the analyst said.
Ganapathy -- ranked third among 14 analysts for his recommendation accuracy on Paytm, according to LSEG data -- also cut his rating on the stock to "underperform" from the "neutral" rating he had since last June. Macquarie had started coverage of Paytm with "underperform" when the stock was listed in 2021.
"Macquarie has consistently been negative about this company since its listing. Whenever they release a negative report, it inevitably casts a shadow over the company, fostering a prevailing sense of negativity," said Kranthi Bathini, an equity strategist at WealthMills Securities.
Now, six analysts have a similar "sell"-equivalent rating on Paytm's stock, compared with none a month back, per LSEG data, while eight analysts have lowered their price targets to 275-600 rupees, compared to the current price of about 383 rupees.
Paytm Payments Bank's transactions have slowly dropped off, with customers uncertain about what will happen in March and if the RBI will extend the deadline, Reuters reported last week.
However, the RBI said on Monday it would not review its decision and investors and customers now await the central bank's frequently asked questions (FAQs), to be released this week, for clarity.
