Paytm shares fell another 20% on Friday before hitting a lower circuit that temporarily halts trading as the Indian financial services company suffers from a crackdown imposed by the central bank.
Paytm’s price fell to 487 Indian rupees, or $5.88, within minutes of the market opening, a 55-week low. Paytm shares also fell 20% on Thursday. Paytm, which currently has a market capitalization of $3.73 billion, has lost $2.1 billion of its market capitalization in two days.
The Reserve Bank of India (RBI) this week expanded its restrictions on payments bank Paytm, which processes transactions for financial services giant Paytm, preventing it from offering several banking services, including accepting new deposits and credit transactions via its services. In response, Paytm said it would end business with its subsidiary and seek partnerships with other banks.
Even as Paytm insists that the RBI’s direction will, in the worst case, wipe out $60 million from its annual EBITDA, the market overall is reading the situation differently.
With a market capitalization of $3.7 billion, Paytm is valued at less than a third of its own rival, Walmart-backed PhonePe. PhonePe, which raised $850 million last year at a $12 billion valuation, generates less than half of Paytm’s revenue. Also, Paytm has raised over $5 billion in private rounds and IPO.
Market analysts are having a difficult time revising the target price of Paytm stock. Morgan Stanley said in a note to clients on Friday that it had cut its price target for Paytm to 555 Indian rupees, from 690 on Thursday.
India’s central bank may not be done with the sanctions it imposed on Paytm yet. It has internally discussed revoking Paytm’s payments bank licence, TechCrunch reported on Thursday.