Shares of One97 Communications (Paytm) rose 3 per cent in Friday’s trade, breaking a four-day losing streak. The stock, which had hit an all-time low of Rs 439.60 in the previous session, rose 4.7 per cent to trade high of Rs 461.80 in Friday’s trade on bargain hunting. The stock had recently taken a tumble after a Macquarie report suggested that Reliance Group’s Jio Financial Services could emerge as a major threat to fintechs like Paytm.
“Better improvement in margin profile coupled with better monetization indicates achievement of operational profitability (positive Ebitda before ESOP cost),” Arihant Capital said in a note on Friday.
The brokerage said net payment take rate has improved, which is an encouraging sign. “Payments revenue in the second quarter was supported by continued platform expansion in MTU and merchant base, growth in subscription (and MDR) revenue from offline merchants and higher GMV from online merchants in the payment gateway business,” it said, while not offering any targets. said for paytm
Foreign brokerage Citi this week said that while eliminating risks for Paytm such as competition and sales by existing pre-IPO shareholders, such risks appear overpriced at prevailing valuations. It has a target price of Rs 1,055 on the stock, suggesting a potential upside of 139 per cent.
JM Financial also said this week that it expects Paytm’s revenue to grow at a robust CAGR of 32 per cent over FY2022-26, largely helped by the financial services business. This is even when it looks at the risk of current take rates. The brokerage has set a target of Rs 600 on Paytm stock.
“While the financial services business is relatively new for Paytm, we see strong growth runway going forward given the large untapped opportunity. Furthermore, we believe the incremental path to profitability will primarily hinge on continued improvement in overall revenue. Dependent, which is linked to reduction in marketing and cash back expenses and ESOP cost for Paytm,” it said.
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