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Paytm shares climb 7% despite rise in Q1 loss, here's why

Paytm shares climb 7% despite rise in Q1 loss, here's why

Paytm stock rose 6.74 per cent to Rs 836.5 today against the previous close of Rs 783.65 on BSE.

Shares of Paytm have recovered 63.69 per cent from their 52-week low in three months. Shares of Paytm have recovered 63.69 per cent from their 52-week low in three months.

Shares of Paytm (listed as One97 Communications) gained nearly 7 per cent on Monday after the Vijay Shekhar Sharma-led firm reported a 88 per cent rise in revenue for the quarter ended June 2022. Sentiment turned positive toward the stock after the firm said it remained confident of achieving break-even by September '23 quarter and was also bullish on customer demand on usage of platform and monetisation.

Paytm stock rose 6.74 per cent to Rs 836.5 today against the previous close of Rs 783.65 on BSE.

Shares of the digital payments firm were trading higher than the 5-day, 20-day, 50-day and 100-day moving averages but lower than 200-day moving averages.

However, the stock has lost 37.62 per cent in 2022 but risen 19.14 per cent in a month.

Market cap of Paytm rose to Rs 54,130 crore on BSE.

Total 3.94 lakh shares of the firm changed hands amounting to a turnover of Rs 32.32 crore. The stock hit a 52-week high of Rs 1961.05 on November 18, 2021 and a 52-week low of Rs 511 on May 12, 2022.

Shares of Paytm have recovered 63.69 per cent from their 52-week low in three months.

However, the large cap stock is still down by Rs 1,118.5 or 57.21 per cent compared to its IPO listing price of Rs 1,955 on November 18, 2021.

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Consolidated loss of the firm widened to Rs 644.4 crore in the first quarter against a net loss of Rs 380.2 crore a year ago.

Paytm said its contribution profit, which excludes taxes and marketing expenses but includes promotional incentives, grew over three-fold to Rs 726 crore in June 2022 quarter from Rs 245 crore in the year-ago period.

Revenue from operations rose 89 per cent to Rs 1,680 crore in Q1 from Rs 891 crore in the June 2021 quarter.

Despite widening of losses in Q1, ICICI Securities has maintained its 'buy' call on the stock with a target price of Rs 784.

"One 97 Communications Ltd (Paytm) continues to sequentially improve its margins as evidenced in its reported consolidated loss of Rs 650 crore in Q1FY23 being lower than the loss of Rs 760 crore in Q4FY22," said ICICI Securities.

ALSO READ: Paytm Q1 net loss widens to Rs 644 crore, revenue up 88.5%

YES Securities upgraded Paytm from 'Reduce' to 'Neutral' with a revised price target of Rs 850.

"Improvement in Net Payments Margin was driven by multiple factors: Net Payments Margin improvement was driven by (1) The company being able to negotiate better rates from banks (2) Optimizations for better transaction routing, mainly loading of wallet through UPI (3) Improved margin in online payments business due to account rationalisation. Improvement in contribution margin was also driven by multiple factors: Improvement in contribution margin was driven by (1) Improvement in Net Payments Margin (2) Rise in the share of Financial Services Revenue from 6 per cent in 1QFY22 to 16 per cent in 1QFY23 (3) Rise in the share of Commerce Revenue (4) Promotional cashback and incentive and other direct cost as a percentage of revenue remaining stable QoQ," said YES Securities.