Shares of One97 Communications, Paytm parent, have rallied more than 60% so far in 2023 to Rs 868 on NSE. The Vijay Shekhar Sharma-led company reported robust June quarter business. Paytm's credit business reported a 167% YoY growth for the June quarter, disbursing Rs 14,845 crore in loans. The overall number of loans facilitated on the payments platform grew to 1.28 crore, a 51% increase
Paytm has seen its monthly transacting user base grow to 9.2 crore, a 23% YoY growth from 7.5 crore users it had during last year's June quarter. The number of payment devices deployed grew to 79 lakhs, which almost doubled from 38 lakh devices it had during the previous fiscal
Paytm continues to be the third-largest player in the UPI ecosystem, the country's most popular digital payment method with over 9 billion monthly transactions and close to Rs 15 crore in transaction value. Its market share on the UPI platform stands at around 13%. Its bigger rivals are PhonePe and Google Pay
Brokerage firm Citi has a 'buy' rating on the stock and it raised Paytm's target price to Rs 1,160 post Q1FY24 business update. Meanwhile, Morgan Stanley holds a positive view with an 'Equal Weight' rating on the counter with a share price target of Rs 750. Ten out of 13 analysts covering the fintech major have a 'buy' rating on the stock
"We continue to like Paytm’s strength as a payments-led, fintech platform, its leadership in product development and recent execution track record (devices, lending distribution, UPI Lite, etc.)," said Citi in its research report
Analysts at Citi expect Paytm's net payment margins at 14bps in Q1FY23 (+110bps YoY). They also estimate 20bps QoQ moderation in take-rate in financial services. Overall, the brokerage estimates 8% QoQ improvement in contribution profits to Rs 1,190 crore. It expects more modest gains in the Apr-June quarter, driven by seasonally higher marketing spends (IPL) and employee costs
According to analysts at Morgan Stanley, Allowance of merchant discount rate under UPI; Introduction of interchange on wallets as it turns interoperable; and Better-than-expected execution on financial services, in terms of underwriting and large bank/NBFC tie-ups, are the key risks to upside. Higher-than-expected competitive intensity in payment and/or reduction in payment charges. Weak execution in financial service, and Negative impact from changes to digital payment charges are the risks to downside
Recently, Motilal Oswal Financial Services also revised its share price target on Paytm shares to Rs 1,050, as it believes that the constant improvement in contribution margin and operating leverage will continue to drive Paytm’s operating profitability. The brokerage said Paytm is on track to report Ebitda breakeven in 2HFY25 after reporting adjusted Ebitda breakeven, almost a year ahead of its guidance
Earlier on June 29, BofA Securities suggested a price target of Rs 1,020 on the Paytm stock while keeping a 'buy' tag on the stock. Meanwhile, just four months after it gave a double upgrade to Paytm shares, Macquarie has downgraded the stock yet again to neutral from the earlier rating of outperform, maintaining its price target for Paytm at Rs 800 per share
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