Analysts said this is likely to put a hurdle in the company's small finance bank aspirations. "The stock could see a gap down opening," said independent market expert Ambareesh Baliga. "The immediate impact will be negative as they can't onboard new customers. This also speaks volumes about internal controls, especially the on-boarding process of new customers."
Last year, Paytm launched India's biggest initial public offering of ₹18,300 crore. Since its listing, the stock has been trending down due to valuation concerns. The stock closed at ₹776.15 on Friday as against its IPO price of ₹2,150. Its record low is ₹728.50. Analysts are also worried that profitability may remain elusive for a longer period.
"Sentiments have been affected since the IPO because of valuations, this is another negative as it can also affect their chances of upgrading to a small finance bank," said Baliga.
Compared to its IPO valuation of ₹1.5 lakh crore, the stock's valuation is now just a little over ₹50,000 crore.
"The biggest problem is going to be that they wanted to apply for an SFB licence, I don't think it will come soon or at all," said Kush Katakia, CEO at Beanstalk Advisory. "Even at ₹50,000 crore these issues are coming up," said Katakia.
Macquarie said it does not expect the impact on business for Paytm from this ban to be substantial since it has already onboarded a very large customer base onto the payments bank but there is likely to be a significant impact on Paytm's brand and customer loyalty going forward. It has an underperform rating with a target proce of ₹700.
ICICI Securities estimates Paytm's consumer base to grow by 10% in FY23 and monthly transacting users to increase at over 25% run rate. The brokerage cut the target price to ₹1,285 from ₹1,352, maintaining its buy rating, as it expects moderation in the onboarding of new users and the adverse impact on incremental payment revenue.
One97 stock faces stress as RBI raps Paytm Bank - Economic Times
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