One97 Communications, the parent company of Paytm’s Q3 revenue from operations increased by ~88% to ₹1,456 Cr when compared to the same quarter last year. However, it posted a net consolidated loss of ₹778.5 crores. Its share price had been low, but it has recovered as the stock was up by more than 2% on the BSE. It was trading at ₹972 a piece in Monday’s early deals.
Macquarie
Brokerage firm Macquarie Research in its note said it remained “underperform” on the stock and cut its target price to Rs 700, down 22% from the current rate, after the digital payments giant widened its losses in the last quarter of 2021. Macquarie had earlier set a target of ₹1,200 on Paytm parent One 97 Communications.
Goldman Sachs
Goldman Sachs had recently cut Paytm’s price target to ₹1,600 from ₹1,630 and it further reduced its target to ₹1,460. However, it changed its rating from ‘neutral’ to ‘buy’. It sees the stock might reach ₹2,090 if it is bullish and ₹820 if it is bearish.
It said that it changed its rating based on expectations of better than expected rate and continued gains in market share in the payments vertical. It sees continued strong traction in lending, with new disclosures suggesting a healthy performance of the loan Portfolio.
It believes that Paytm remains well-positioned to capture a share of digital payments in India and it views Paytm’s business model as characterized by the network effect.
“We believe Paytm’s strong topline growth of 89% YoY in 3QFY22 (11% ahead of GSe) will help allay investor concerns around declining payments take rate in recent years. In addition, Paytm continues to gain market share across both Unified Payments Interface (UPI) and non-UPI, and its lending business is seeing robust traction (+201% YoY revenue growth in 3Q),” Goldman Sachs said.
“We expect Paytm’s increase in scale to result in an improving margin trend, with the company reaching adjusted Ebitda breakeven by FY25E. We also note that Paytm has a strong balance sheet ($1.4 billion cash as of December 2021), and see limited likelihood of the company needing to raise capital again ($210 million annual cash burn),” Goldman Sachs added.
Goldman Sachs has a forecast of 89 per cent YoY revenue growth in Q4FY22 and it expects 35% revenue CAGR (compounded annual growth rate) over FY22-25.
Yes Securities
Yes Securities has also upgraded the stock from ‘sell’ to ‘reduce’. It has revised the stock’s target to ₹990 with a 4% upside potential.
JM Financial
JM Financial has maintained its ‘sell’ call on Paytm and has given a target of ₹875.
Dolat Capital
“We believe Paytm peers unique play that would gain from the digitization of payments,
commerce and financial services in India on a very powerful Tech-platform that ensures significant leverage on lower CAC, which can drive significant portability over time. We maintain our buy rating with a target of Rs 2,500 (10xFY25E EV/Revenue),” Dolat Capital Market said.
BofA Securities
It said that Paytm’s YoY improvement was driven by a recovery in commerce & cloud. More machines were deployed at merchant outlets. Further, Paytm’s Q3 revenue beat BofA Securities estimates by 18%. EBITDA losses increased to ₹788 crores mainly because of rising employee expenses.
Morgan Stanley
About two weeks ago Morgan Stanley reduced its stake in Paytm substantially. Its name was missing from the key shareholders’ list. However, it was not clear if the brokerage firm sold its entire stake or has kept it below 1%.
