Paytm‘s shares tanked over 8% on Tuesday morning to hit a new lifetime low of ₹386.25.

What Happened: The massive drop today comes as Macquarie made a significant revision to its price target on One97 Communications, the parent company of Paytm. Citing concerns over potential customer attrition amidst heightened regulatory scrutiny, Macquarie has slashed its target to ₹275, a stark 57.7% decrease from its previous target of ₹650. The brokerage firm has an “underperform” rating on the stock.

With this new target, Paytm’s valuation would plummet to approximately $2.1 billion, a notable decline from its peak market capitalization of nearly $20 billion in late 2021.

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The analysts said that the decision to lower the price target stems from apprehensions regarding customers transitioning away from the platform due to increased regulatory oversight.

Additionally, the impending task of transferring payment bank and related merchant accounts to other banks within the Reserve Bank of India’s (RBI) February 29th deadline presents a significant challenge, as per the analysts. “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 Feb 29th deadline will be an arduous task,” the analysts added.

Price Action: Paytm’s share price was down 6.60 to trade at ₹394.30 in early trade on Tuesday.

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