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regular-article-logo Tuesday, 21 May 2024

One97 Communications shares tank 10 per cent as RBI refuses to review order against Paytm Payments Bank

The selloff came after remarks by RBI governor Shaktikanta Das on Monday where he said the central bank will not go back on its order against PPBL

Our Special Correspondent Mumbai Published 14.02.24, 10:43 AM
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Shares of One97 Communications, the Paytm parent, tanked 10 per cent on Friday after the Reserve Bank of India (RBI) ruled out any review of its action against Paytm Payments Bank (PPBL).

Investors were also alarmed by a foreign brokerage downgrading the stock, sharply cutting its target price.

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The stock crashed 10 per cent to close at Rs 380 on the BSE — not only did it fall to a 52-week low but also tumbled below Rs 400 for the first time.

In volume terms, 1.14 crore equity shares were traded on the NSE — where it fell to Rs 380.35 — while 15.92 lakh shares were traded on the BSE.

The selloff came after remarks by RBI governor Shaktikanta Das on Monday where he said the central bank will not go back on its order against PPBL.

It was also on account of Macquarie downgrading the stock to underperform and drastically cutting the target price to Rs 275 from Rs 650.

The target, which is said to be the lowest among the 14 analysts covering the stock, indicates prices could drop by another 28 per cent.

Suresh Ganapathy and Punit Bahlani of Macquarie said Paytm faces a “serious risk of exodus of customers’’ which at an overall level stands at 33 crore and 11 crore monthly transacting users (MTUs) apart from a merchant subscription network of nearly 1.1 crore.

This significantly jeopardises its monetisation as well as its business model. “We cut revenues sharply as we reduce both payments and distribution business revenues (60-65 per cent over 2024-25/2025-26). 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 February 29 deadline will be an arduous task,’’ they added.

A possible migration of customers to other platforms could benefit players such as PhonePe, Google Pay or lenders such as HDFC Bank and State Bank of India.

Meanwhile, One 97 Communications Ltd is awaiting approval from the Centre for downstream investment in its 100 per cent subsidiary Paytm Payments Services Ltd (PPSL). The Paytm entity has applied for a payment aggregator licence.

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