One 97 Communications (Paytm) zoomed 10.70% in the past five days, following a 60.77% plunge since January. Its shares were trading at ₹ 525.10 apiece at 11:40 AM on the National Stock Exchange (NSE). The company’s management told analysts that it would become cash flow positive within the next 12 to 18 months.
It reiterated the fact that it is confident of strong growth and achieving breakeven on an adjusted EBITDA basis by September 2023. (Adjusted EBITDA does not include one-time expenses like exceptional items, restructuring charges or share-based compensations.)
The company added that it makes a net payment margin of 7 to 9 bps of GMV on processing, at present. Of this, UPI gives it 3 to 4 bps, while other instruments give it 15 to 18 bps.
“Since UPI is growing faster than other instruments, we expect blended margin to stabilize at 5 to 7 bps,” it said.
Paytm believes that the current phase is the early days of payments in India. UPI has about 25 crore signed-up customers, however, there are merely 1 crore devices in the market.
Vijay Shekhar Sharma, founder & CEO, of Paytm said, “We believe overall subscriptions for payment and other services will be a large market. India could have potential of 10 crore merchant entities and more than 50 crore payment customers in near term. Expanding merchants’ business by offering coupons, deals, marketing and loyalty will create more revenue and profit for our commerce business.”
The company sees great opportunities in bank partnerships to sell its products. It said that FASTag and co-branded credit cards are already a success, and EMI aggregation on PG and remittance among others could be next. As far as financial services are concerned, it said that it will focus on growing loan and stock brokerage offerings.
Morgan Stanley has maintained an “equal-weight” rating on the stock with a target price of ₹ 695.00. This translates to an upside of 32.36%, compared to its current share price of ₹ 525.10.
CLSA has maintained a buy rating on the stock with a target price of ₹ 650.00. This implies an upside of 23.78%, compared to its current share price.
Written by Simran Bafna
