May 8, 2023

Paytm shares surge 5% after Q4 show. SECTIONS By Rate Story Synopsis After the company reported strong January-March quarterly results, several top Indian and foreign brokerages took a view on the stock. Among foreign brokerages, Macquarie maintained an ‘outperform’ rating on the stock while Goldman Sachs took a ‘buy’ view. In the domestic pack Motilal Oswal has a ‘buy’ rating while Yes Securities has a ‘neutral’ stance on the counter. Reuters Shares of One 97 Communications which operates digital payments and financial services platform Paytm shot up nearly 5% in Monday's opening trade after the company significantly reduced its losses for the quarter ended March. The company’s consolidated net loss narrowed to Rs 168 crore from Rs 761 crore a year ago, and Rs 392 crore a quarter ago. Consolidated revenue from operations surged by nearly 52% year-on-year to Rs 2,335 crore. The earnings were announced on Friday after market hours. The stock has been on a roll and has gained nearly 12% over the past 6 trading sessions, including today. After the company reported strong January-March quarterly results, brokerage firm Macquarie maintained an 'outperform’ rating on the stock while Goldman Sachs took a ‘buy’ view. In the domestic pack Motilal Oswal has a ‘buy’ rating while Yes Securities has a ‘neutral’ stance on the counter. Should you buy, sell or hold Paytm's stock? Here's what analysts say: Discover the stories of your interest Goldman Sachs: Buy | Target: Rs 1,150 | Upside: 67% Brokerage firm Goldman Sach has maintained a buy rating on Paytm stating that Friday's Q4 earnings should largely put to rest debates around Paytm’s business model traction and profitability. It further said that the resolution of outstanding regulatory issues (ban on PPBL and online merchant onboarding) as the next set of catalysts for the stock. “Paytm’s revenue growth profile is in line with its India Internet peers, with profitability higher, and valuations that are at the lower end against its peers,” it said. "We see risk-reward as skewed to the upside, with 103% potential upside in a bull case versus 17% downside in a bear case. With an unchanged 12m SOTP/DCF-based target price of Rs 1,150," it added. Macquarie: Outperform | Target: Rs 800 | Upside: 21% Macquries initiated an outperform rating on Paytm with a price target of Rs 800. Thr brokerage said that Paytm reported EBITDA before ESOP costs at Rs 230 crore which was higher than estimated (Rs 160 crore) by the brokerage firm largely because of higher UPI incentive fees. However, Macquarie pointed out a few headwinds in its note on Paytm. Structural challenges like BNPL (buy now pay later) models remain it said noting that they have failed across the world including India. Though PayTM does not carry any balance sheet risk on the loans originated, it carries significant business and reputation risk, it said further. "Few months of bad performance could result in lenders withdrawing their credit lines, significantly affecting its ability to grow," Macquarie said. "There are risks related to competition as well as regulatory issues as PayTM frequently seems to be facing regulatory ire for lapses on its part," it added. Citi: Buy | Target: Rs 1,144 | Upside: 66% City has revised its price target upwards on Paytm to Rs 1,144 from Rs 1,103 estimating an upside of 66% upside. "Our SOTP-derived TP implies 39X EV/Adj EBITDA on March 2026E (CMP: 22X)," it said. "Despite competition, Paytm continues to be ramping up growth as well as monetisation while taking leadership in new product development (devices, UPI-Lite etc. )," it added. Motilal Oswal: Buy | Target: Rs 900 | Upside: 31% Motilal Oswal estimates Paytm to achieve EBITDA breakeven by FY25 and value Paytm based on 18X FY28E EV/EBITDA and discount the same to FY25E taking a discount rate of 15%. It values the stock at Rs 900 which implies 4.5X FY25E P/Sales. Yes Securities: Neutral | Target: Rs 750 | Upside: 9% Yes Securities maintained neutral stance on Paytm with a revised price target of Rs 750. It values the stock at 4.3X FY24 P/S to arrive at our price target of Rs 750. Dolat Capital: Buy | Target: Rs 1,250 | Upside: 81% Dolat Capital intitated a buy rating with a target price of Rs 1250. "Improving monetisation and large underpenetrated user base provide continued run-way for growth," Dolat said in a note. "Sustained focus on profitability affirms brokerage's positive stance on Paytm’s ability to leverage its scalable fintech platform," it added. (Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of Economic Times) Don’t miss out on ET Prime stories! Get your daily dose of business updates on WhatsApp. click here! Monday, 08 May, 2023 The Centre is likely to make windfall gains by way of annual dividend receipts from the Reserve Bank of India (RBI), which is estimated to have garnered substantial profits in foreign-currency trading and by lending to the local banking system after the rise in policy rates and liquidity drainage prompted high-street lenders to borrow more from the RBI.