Paytm share price has jumped more than 35% so far in 2023, and brokerages see further upside in the fintech stock. The stock hit an intraday high of Rs 718 on NSE today, up 1.5% from the previous close of Rs 707.
In the last 5 trading sessions, Paytm shares have rallied more than 8%. The Vijay Shekhar Sharma-led company's stock logged a 32% gain in the last 12 months. Despite the recovery, the stock is trading lower than its 52-week high.
Paytm shares are currently trading around 63% higher than their 52-week low of Rs 438, hit in November last year. However, it is down nearly 15% from the 52-week high of Rs 844, hit in August 2022.
According to analysts at Goldman Sachs, sustainability of Paytm’s credit metrics has been a key investor concern, and the results should help build confidence around the scalability of the company’s lending book. The brokerage has set a target of Rs 1,150 on the stock.
As per Goldman Sachs analysts, Paytm's Q4 results should largely put to rest debates around Paytm’s business model traction and profitability. "We see resolution of outstanding regulatory issues (ban on PPBL and online merchant onboarding) as the next set of catalysts for the stock," they said.
According to Citi, Paytm has several growth & profitability tailwinds as the brokerage see digital payments seeing robust growth, and significant headroom for 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," Citi said. It has a 'buy' call on the stock with a target price of Rs 1,144, up from Rs 1,103 earlier.
Macquarie Research has an 'Outperform' rating on Paytm stock with a target price of Rs 800. However, it noted that a few months of bad performance could result in lenders withdrawing their credit lines, significantly affecting Paytm's ability to grow.
"There are risks related to competition as well as regulatory issues as Paytm frequently seems to be facing regulatory ire for lapses on its part. We also believe a lot more needs to be done on corporate governance by getting an independent non-executive Chairman, more independent members on the board etc," Macquarie said.
Yes Securities has assigned a 'Neutral' rating to the Paytm stock with a revised target price of Rs 750. "There is room for the adjusted EBITDA margin to continue to move up for several years, driven by operating leverage," it said.
Recommendations, suggestions, views, and opinions given by the experts are their own. These do not represent the views of Business Today. Investors should consult their financial advisors before taking any position.