New Delhi: One97 Communications Ltd, the parent company of Paytm, India’s leading online payments platform, has been weathering severe storms, leading to investor losses of a staggering Rs 26,000 crore in just 10 days. This dramatic plunge is attributed to a double whammy: a shift in kirana store preferences and the continued stance of the Reserve Bank of India (RBI) against payments banks.
Kirana Disconnect: Paytm has faced a significant setback with kirana stores, traditionally strong adopters of its services, reportedly moving away from the platform. This shift, potentially a result of various factors like payment charges or alternative offerings, has impacted Paytm’s user base and transaction volume.
RBI Stance Looms Large: Adding to the woes, the RBI’s refusal to modify its stance on payments banks has weighed heavily on investor sentiment. The regulatory restrictions limit Paytm Payments Bank’s expansion, hindering its growth potential.
Stock Tumbles: Reflecting these concerns, Paytm’s shares plunged nearly 9% on Wednesday, reaching a low of Rs 344.90 on the BSE. This translates to a staggering 55% value loss in the 10 days since the RBI announcement, wiping out an estimated Rs 26,000 crore from investor pockets.
Brokerage Downgrades: Global broking firm Macquarie has dealt another blow, downgrading Paytm to “underperform” and setting a target price of Rs 275, significantly lower than their previous optimistic estimations. This reflects concerns about Paytm’s fight for survival and the potential customer exodus due to recent regulatory measures.
Looking Ahead: Paytm faces a crucial period as it navigates the changing kirana landscape and the regulatory hurdles. Adapting to kirana needs and exploring alternative growth avenues while seeking regulatory clarity will be critical for regaining investor confidence and ensuring the platform’s long-term viability.
