Weakness is seen in the shares of One 97 Communications Ltd (Paytm). The stock has fallen more than 4 percent to a price of Rs 552. Whereas on Friday it closed at Rs 576. Last week Paytm released its quarterly results. The company’s loss has increased year-on-year to Rs 761 crore in the March quarter. However, there has been a big jump of 89 percent in revenue. Even though the company has incurred huge losses in the March quarter, brokerage houses are positive about the stock. Brokerage house ICICI Securities has projected more than 100 percent return in the stock.
What are the positives for the company
Brokerage house ICICI Securities says that on a quarterly basis, the loss of Paytm has come down. It was close to 7.8 billion in the December quarter. Penetration of lacing product has improved. At the same time, the lending business has improved due to the ‘Buy Now Pay Later’ (BNPL) product. The adjusted EBITDA margin of the company has also increased due to better net payment rate. The contribution of financial services revenue has increased, when expenses have been controlled. Momentum remains in Monthly Transacting User (MTU) growth.
how far will the share price go
However, revenue growth has been moderate on a quarterly basis. There is also a decline in Payment Services to Merchant. Commerce revenue has also been moderate. There was only 4 per cent growth in GMV on a quarterly basis. The brokerage house has predicted that EBITDA will be positive till FY25E. The brokerage house has given investment advice in the share of Paytm with a target of Rs 1285. In terms of current price of Rs 552, it can give 132 percent return.
Growth in Financial Services and Cloud Business
Brokerage house Goldman Sachs has also advised to invest in the stock of Paytm and has given a target of Rs 1070. The brokerage says that the cash burn of the fintech company is improving. Growth momentum is visible in the financial services and cloud business. Monetization of the payment vertical has improved. The company’s guidance is also positive and it is expected that the adjusted EBITDA of the company will reach breakeven by September 2023.
72% cheaper than record high
The share of Paytm has become 72 percent cheaper than the record high. The record high of the stock is Rs 1955. Whereas in today’s trading it has weakened to Rs 552. This year the stock has lost 57 percent. Paytm had disappointed investors on the listing as well. It closed at Rs 1564.15, down 27 per cent against the issue price of Rs 2150, on the listing day on November 18, 2021.
(Disclaimer: Stock investment advice is given by the brokerage house. These are not the personal views of digitnews. Markets are risky, so take expert opinion before investing.)