One 97 Communications (Paytm) share price surged 5.2% to Rs 721.5 today after the payment giant’s consolidated loss narrowed to Rs 167.5 crore in the fourth quarter ended March, compared to a loss of Rs 762.5 crore in the year-ago period. The consolidated revenue from operations jumped 51.5% to Rs 2,334.5 crore in Q4FY23 from Rs 1,540.9 crore in Q4FY22. In the past one month, Paytm shares have jumped 11.5% and 27% in the last one year. “Paytm is expanding at a faster rate; nonetheless, the risk-reward ratio does not favour investors. Paytm continues to lose money while having a very high valuation. We believe that in the long-term investors profit when the company profits. Paytm is not a suitable investment at the current level; better alternatives are available in the market,” said Diwakar Rana, Senior Research Analyst, Prudent Equity.
Stock call: Should you buy, sell or hold Paytm stock?
Goldman Sachs: Buy – Target Price: Rs 1150
“Our 12-month DCF/SOTP-based target price is unchanged at Rs 1,150 (unchanged WACC and terminal growth assumptions of 14% and 5%). We reiterate our Buy rating (on Conviction List) and believe Paytm’s current share price continues to offer a compelling entry point into India’s largest and one of the most profitable fintech platforms,” said analysts at Goldman Sachs.
Motilal Oswal: Buy – Target Price: Rs 900
“We estimate Paytm to achieve EBITDA break-even by FY25 and value Paytm based on 18x FY28E EV/EBITDA and discount the same to FY25E taking a discount rate of ~15%. We thus value the stock at Rs 900, which implies 4.5x FY25E P/Sales,” said analysts at Motilal Oswal.
Citi: Buy – Target Price: Rs 1144
“Paytm has several growth/profitability tailwinds in our view: a) digital payments continue to see robust growth (note) b) significant headroom for an increase in penetration of lending products into existing consumers. We expect Adj. EBITDA/EBIT margins to expand from 5%/(3)% in 4QFY23 to 13%/9% by FY26E on topline growth at 20% CAGR over FY23-26E. CMP implies 22x FY26E EV/Adj. EBITDA (our TP derived from a SOTP implies 39x),” said analysts at Citi Research.
Dolat: Buy – Target Price: Rs 1250
“Improving monetization and a large underpenetrated user base provide continued run-way for growth, while sustained focus on profitability affirms our positive stance on Paytm’s ability to leverage its scalable fintech platform. We maintain our Buy rating with a target price of Rs 1,250 (implies 5x on FY25E EV/Sales),” said analysts at Dolat Analysis and Research.