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Paytm Jumps Over 6% On High Revenue Growth, Narrowing Losses in Q1; Should you Invest?

By: Aparna Deb

News18.com

Last Updated: August 08, 2022, 13:33 IST

New Delhi, India

Paytm reported robust numbers in June quarter

Paytm reported robust numbers in June quarter

One97 Communications, which owns Paytm, shares surged more than 6 per cent in Monday's intraday trade after the digital financial services provider reported an 89 per cent jump in its revenue

Paytm Shares Today: One97 Communications, which owns Paytm, shares surged more than 6 per cent in Monday’s intraday trade after the digital financial services provider reported an 89 per cent jump in its revenue in the June quarter to Rs 1,680 crore. Its revenue jumped on the back of an increase in subscription revenues due to the growing number of payment devices, growth in bill payments due to growing monthly transacting users (MTUs), growth in disbursements of loans by our partners through our platform, and an increase in commerce revenues. Paytm, however, reported a consolidated net loss of Rs 644.4 crore in the April-June period. The net loss widened from a loss of Rs 380.2 crore on a year-on-year basis, but narrowed from Rs 761.4 crore in the March 2022 quarter. The Vijay Shekhar Sharma-led company said that it is on track to achieve profitability by end of the September quarter of the current financial year.

During the quarter Paytm disbursed loans worth Rs 5,554 crore. The loan distribution business has scaled up significantly over the last 12 months, seeing increased adoption by users. The number of loans at 8.5 million, grew 492 per cent year-on-year (YoY), while the value of loans grew 779 per cent YoY to Rs 5,554 crore, the company said.

The stock jumped around six per cent to Rs 833.05 per share in early trade on the BSE. On Monday’s high, the counter is still trading at over 57 pe cent discount from its 52 week high value of Rs 1961.05.

What Should Investors Do Now?

Analysts at Yes Securities said that “Traction for bread-and-butter Payments Services business was reasonably broad-based with both the Consumer and Merchant sub-segments contributing Rs 5.19 bn and Rs 5.57 bn, growing 73 per cent and 67 per cent YoY, respectively. Financial Services revenue rose 4x YoY to Rs 2.71 bn for the quarter.”

On improvement in net payments margin, the brokerage said: ” 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 rationalization.”

Brokerage house Yes Securities upgraded Paytm from ‘Reduce’ to ‘Neutral’. Acknowledging improvement in trajectory, the brokerage revised the target price to Rs 850 per share. It is an 8 per cent upside on Friday’s closing price of Rs 784 per share.

Morgan Stanley maintained an ‘equal weight’ rating and raised its target price from Rs 675 to Rs 785 per share, while JP Morgan retained an overweight rating for a target price of Rs 1000.

Saying a sharp reduction in processing costs was the key surprise, CLSA recommended a Sell. “While our Ebitda breakeven expectation is similar to that of management, the stock factors in a long-term Ebitda trajectory that we think is difficult to achieve. We maintain our SELL rating,” it said. Interestingly, CLSA increased its target price from Rs 500 to Rs 650 for Paytm.

The views and investment tips by experts in this News18.com report are their own and not those of the website or its management. Users are advised to check with certified experts before taking any investment decisions.

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first published:August 08, 2022, 13:33 IST
last updated:August 08, 2022, 13:33 IST