Ventura Securities has come out with a research note on One 97 Communications Ltd (Paytm) saying the stock can more than double to Rs 1,170 over the next 24 months, as per its base case assumptions. The domestic brokerage suggested a target price of Rs 1,444 per share in its bullish case scenario, which hints at a nearly three-fold jump in the stock price. Even with its bear case assumptions, Ventura finds the stock worthy of Rs 870 level.
Why so bullish? With a clear focus on enhancing its core payment services and expanding into financial services, Paytm is well-positioned to capitalise on the growing digital economy, said Ventura Securities.
Despite RBI stricture on associate Paytm Payment Bank (PPBL), Ventura called Paytm’s business model robust and technology a gold standard.
"Paytm’s pan-India merchant base of 40.7 million and 78 million monthly transacting users (MTUs) presents a strong ecosystem for recurring revenue streams. With UPI emerging as the favoured digital payments medium and Paytm originated soundbox (+POS) becoming an essential toolkit for payments, Paytm is well placed to benefit from the tailwind associated with this," Ventura said.
Base case projections Over FY24-27, Paytm outlook: Ventura expects Paytm's revenue to grow at a CAGR of 14.1 per cent to Rs 14,531 crore, contribution profit 15.6 per cent to Rs 8,301 crore and pre-ESOP Ebitda 54.5 per cent to Rs 1,829 crore.
Besides, it sees post-ESOP Ebitda and net earnings are expected to turn profitable, with forecasts of Rs 1,379 crore and Rs 1,388 crore by FY27, compared to losses of Rs 908 crore and Rs 1,417 crore in FY24.
"This growth is expected on the back of GMV (payment services + devices) fuelling to Rs 32.1 lakh crore (21.9 per cent CAGR), and more than 4 times growth in loan disbursals and doubling of revenues from marketing services. The Paytm Wallet, FASTag, BNPL and house rental payments which were discontinued are expected to resume once the cloud of RBI’s stricture gets cleared," it said.
"The Paytm Wallet, FASTag, BNPL and house rental payments which were discontinued are expected to resume once the cloud of RBI’s stricture gets cleared. As Paytm continues to navigate the evolving fintech landscape, its ability to adapt to regulatory changes, leverage technology, and maintain strong relationships with merchants and MTUs will be crucial to its sustained growth," Ventura said.