Shares of One 97 Communications, parent of Paytm, rose as much as 10 per cent on Monday after falling 4 per cent intraday. Paytm said its March quarter net loss widened to Rs 761.4 crore compared to Rs 441.8 crore in the same quarter last year. Losses were marginally lower than Rs 778 crore in the December quarter. Revenue from operations came in at Rs 1,540.9 crore, up 88.99 per cent against Rs 815.3 crore it recorded in the same quarter year ago.
The large-cap stock opened with a loss of 3.99 per cent at Rs 552.4 against the previous close of Rs 575.35 on BSE. Paytm stock is trading lower than 5-day, 20-day, 50-day, 100-day, and 200-day moving averages.
At 12:03 IST, Paytm shares were up 6.2 per cent at Rs 610.90 on NSE. The stock hit an intraday low at Rs 552.
The company reappointed Vijay Shekhar Sharma as managing director and chief executive for five years, from December 19, 2022, to December 18, 2027. This reappointment, apart from the firm’s Rs 950 crore investment announcement over 10 years in general insurance, gives confidence to investors about business prospects, said a fund manager.
“We wish to inform you that based on the recommendations of the Nomination and Remuneration Committee and subject to the approval of shareholders, the Board of Directors of the Company (‘Board’), at their meeting held on May 20, 2022, have considered and approved re-appointment of Vijay Shekhar Sharma as ‘Managing Director & Chief Executive Officer’ of the Company for a tenure of 5 years effective from December 19, 2022, to December 18, 2027,” One 97 Communications said in a regulatory filing to the stock exchanges.
Paytm Share: Should You Buy, Sell or Hold?
Yes Securities said: “Business trajectory admirable but longish runway still remains for bottom-line profitability.” The brokerage firm further said that “Revenue from Payments Services to Merchants rose 90 per cent YoY to Rs 5.72bn, driven by MDR-bearing instruments GMV and payment devices. Revenue from Financial Services and Others rose 342 per cent YoY to Rs 1.68bn driven by rise in the value of loans disbursed.”
“We maintain ‘Reduce’ on PAYTM with a revised price target of Rs 580: We value PAYTM at 5.5x FY23 P/S, factoring in customer addition embargo and increased regulatory risk,” it said in a note.
ICICI Securities has maintained its buy stance on the stock. “Management is confident of achieving operating profitability (positive EBITDA before ESOP cost) by Q2FY24 on the back of improving contribution margins and decreasing indirect expenses as a percentage of operating revenues. We remain conservative and expect the company to be EBITDA-positive by FY25E. Maintain BUY with an unchanged target price of Rs 1,285 based on customer lifetime value methodology,” it said.
Macquarie has kept its Rs 450 target intact, as it believes profitability is still an uphill battle and that Ebitda losses may take 12 quarters to break even.
Goldman Sachs said Paytm’s lending business has been scaling up well while maintaining good credit metrics, which it believes should further help allay investor concerns.
“Overall, we raise our topline estimates by 3-4 per cent and expect growth momentum to sustain; we forecast 90 per cent YoY revenue growth for Paytm in 1QFY23, with 38 per cent FY22-25E revenue CAGR,” Goldman Sachs said.
“Paytm’s 4QFY22 results exhibited another quarter of strong and improving monetization of the payments vertical, while growth momentum for financial services and cloud businesses remain robust. All this while cash burn has been improving, and the company reiterated its guidance of adjusted Ebitda breakeven by September 2023, which we see as a key catalyst for the stock,” Goldman Sachs said as it suggested a target of Rs 1,070 on the stock.
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