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Macquarie Equity Research has downgraded One97 Communications (Paytm) to “Underperform” and sharply cut its 12-month target price to Rs 275 from Rs 650, saying the bank is “Fighting for survival”.

The downgrade is driven by an estimated 60-65% reduction in revenue across payments and distribution businesses segments in the wake of recent regulatory changes and diktats from the RBI, which poses a “Serious risk of exodus of customers” the brokerage said.

“Moving payment bank customers to another bank account 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 report said.

Additionally, the relationship between Paytm and its lending partners is under scrutiny, with some partners considering scaling down or terminating their relationship with the company.

“AB Capital, one of Paytm’s largest lending partners, has already pared down their BNPL exposure to Paytm from a peak level of Rs 20 billion to Rs 6 billion currently and is expected to go down further in our view.” The brokerage said.

The research factors in a 60-65% decline in distribution revenues, leading to a 170% and 40% increase in loss estimates over FY25/26.

Shares of One97 communications declined more than 7% in Tuesday’s trading session and reached an all time low of Rs 388.25.

RBI has directed Paytm Payments Bank to stop accepting deposits or top-ups in any customer accounts, wallets, FAST Tags, and other instruments after February 29.

On Monday, RBI Governor Shaktikanta Das stated that there will be no review of the central bank’s decision to halt Paytm Payments Bank’s operations following a comprehensive assessment of the lender’s functioning, reiterating that the directive stands firm.

RBI expected to release a set of Frequently Asked Questions on the Paytm matter soon.