Shares of One 97 Communications (Paytm) jumped 3 per cent in Friday's trade, snapping a four-day losing streak. The scrip that hit an all-time low of Rs 439.60 in the previous session staged a recovery, rising 4.7 per cent to hit a high of Rs 461.80 in early Friday trade on bargain hunting. The scrip was down recently after a Macquarie report said Reliance Group's Jio Financial Services could emerge as a formidable threat to fintechs like Paytm.
"Better improvement in margin profile with better monetisation suggests achievement of operating profitability (positive Ebitda before ESOP cost) ahead of its guided timeline of Q2FY24," Arihant Capital said in a note on Friday.
The brokerage said that net payment take rate has improved, which is an encouraging sign. "Payment revenue in Q2 build-up was supported by continued platform expansion across MTU and merchant base, growth in subscription (and MDR) revenue from offline merchants and higher GMV from online merchants in payment gateway business," it said while not offering any target for Paytm.
Foreign brokerage Citi this week said while overhanging risks for Paytm such as competition and selling by existing pre-IPO shareholders stay, such risks look overdone at the prevailing valuations. It has a target of Rs 1,055 on the stock, suggesting a potential 139 per cent upside.
JM Financial, also this week, said it expects Paytm revenue to grow at a strong CAGR of 32 per cent over FY22-26E, primarily aided by scale in financial services business. This is even as it sees risks to the current take rates. The brokerage has a target of Rs 600 on Paytm stock.
"While financial services business for Paytm is relatively new, we see strong growth runway going ahead given the large untapped opportunity. Further, we believe incremental path to profitability remains primarily contingent on continued improvement in overall revenue, coupled with reduction in marketing and cash back spends and ESOP costs for Paytm," it said.
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