Paytm shares receive 'Buy' rating from Mirae Asset; target price suggests 23% upside
Paytm has been able to rapidly increase cross-selling on its platform, resulting in an improved contribution of financial services to the total revenue.
- Jan 3, 2025,
- Updated Jan 3, 2025 4:04 PM IST
Mirae Asset Capital Markets has initiated coverage on One 97 Communications Ltd (Paytm) with a Buy rating and a target of Rs 1,210 suggesting 23.46 per cent potential upside over Friday's closing price of Rs 980. The domestic brokerage expects Paytm to achieve breakeven at the Ebitda level (before ESOP expenses) in Q4FY25 and at net profit level in Q4FY26. Besides, it expects Paytm's contribution margin (CM) to remain in the range of 53-64 per cent between FY25-FY30.
"With plans to expand its reach with new devices, we estimate Paytm to deliver payment services revenue CAGR of 22 per cent over FY24-FY30E. Paytm has been able to rapidly increase cross-selling on its platform, resulting in an improved contribution of financial services to the total revenue. We expect financial services revenue to grow at a 25 per cent CAGR over FY24-FY30E. Effectively, Paytm revenue to grow at 22 per cent CAGR over FY25E-FY30," Mirae Asset Capital Markets said.
The brokerage said a strong network effects, combined with a robust tech platform and a dedicated sales team, make Paytm a formidable player in the Fintech space. With the revival of products, such as wallets and BNPL, in the future, Paytm's gross merchandise value (GMV) is expected to experience higher growth.
Mirae said Paytm has proven itself as a trailblazer in the constantly evolving fintech landscape, setting the pace for digitalisation with its innovative approach. It boasts an industry-leading base of 4.2 crore registered merchants, including 1.12 crore payment devices, and has reported an impressive GMV growth of 52 per cent CAGR over FY19-FY24.
Despite facing recent regulatory restrictions that caused a decline in its monthly transactions (7.1 crore in 2QFY25 against 10 crore in 3QFY24), Paytm's merchant base has remained stable at 4.2 crore due to strategic measures to retain existing merchants on its platform, Mirae said.
"Further, the company's new pure payments business model has gained traction. With a strong focus on product innovation, a solid foothold in the industry, and the ability to utilize its ecosystem for cross-selling,Paytm is well-equipped to deliver a healthy growth rate of 20 per cent CAGR in its GMV over FY24-FY30E, in line with its 27 per cent market share in India's digital payment," it said.
Mirae Asset Capital Markets has initiated coverage on One 97 Communications Ltd (Paytm) with a Buy rating and a target of Rs 1,210 suggesting 23.46 per cent potential upside over Friday's closing price of Rs 980. The domestic brokerage expects Paytm to achieve breakeven at the Ebitda level (before ESOP expenses) in Q4FY25 and at net profit level in Q4FY26. Besides, it expects Paytm's contribution margin (CM) to remain in the range of 53-64 per cent between FY25-FY30.
"With plans to expand its reach with new devices, we estimate Paytm to deliver payment services revenue CAGR of 22 per cent over FY24-FY30E. Paytm has been able to rapidly increase cross-selling on its platform, resulting in an improved contribution of financial services to the total revenue. We expect financial services revenue to grow at a 25 per cent CAGR over FY24-FY30E. Effectively, Paytm revenue to grow at 22 per cent CAGR over FY25E-FY30," Mirae Asset Capital Markets said.
The brokerage said a strong network effects, combined with a robust tech platform and a dedicated sales team, make Paytm a formidable player in the Fintech space. With the revival of products, such as wallets and BNPL, in the future, Paytm's gross merchandise value (GMV) is expected to experience higher growth.
Mirae said Paytm has proven itself as a trailblazer in the constantly evolving fintech landscape, setting the pace for digitalisation with its innovative approach. It boasts an industry-leading base of 4.2 crore registered merchants, including 1.12 crore payment devices, and has reported an impressive GMV growth of 52 per cent CAGR over FY19-FY24.
Despite facing recent regulatory restrictions that caused a decline in its monthly transactions (7.1 crore in 2QFY25 against 10 crore in 3QFY24), Paytm's merchant base has remained stable at 4.2 crore due to strategic measures to retain existing merchants on its platform, Mirae said.
"Further, the company's new pure payments business model has gained traction. With a strong focus on product innovation, a solid foothold in the industry, and the ability to utilize its ecosystem for cross-selling,Paytm is well-equipped to deliver a healthy growth rate of 20 per cent CAGR in its GMV over FY24-FY30E, in line with its 27 per cent market share in India's digital payment," it said.