Should You Invest If Paytm Jumps Over 6% on Strong Revenue Growth and Narrowing Q1 Losses?

Should You Invest If Paytm Jumps Over 6% on Strong Revenue Growth and Narrowing Q1 Losses?

Paytm Shares Today: hares of One97 Communications, which owns Paytm, rose more than 6% intraday on Monday after the provider of digital financial services reported an increase in quarterly revenue of 89% to Rs 1,680 crore. The company’s revenue increased as a result of a rise in subscription revenues brought on by an increase in payment devices, a rise in bill payments brought on by an increase in monthly transacting users (MTUs), a rise in loan disbursements made by our partners via our platform, and an increase in commerce revenues. Paytm, however, posted a combined net loss for April and June of Rs 644.4 crore. On an annual basis, the net loss increased from a loss of Rs 380.2 crore, although it decreased from Rs 761.4 crore in the quarter ending in March 2022. The Vijay Shekhar Sharma-led business claimed that it was on track to turn a profit by the conclusion of the current fiscal year’s third quarter of September.

Paytm disbursed loans totaling Rs 5,554 crore throughout the quarter. Over the past 12 months, the loan distribution industry has experienced substantial growth and user adoption. According to the corporation, the value of loans increased by 779 percent year over year to Rs 5,554 crore, while the number of loans, at 8.5 million, increased by 492%.

In early trade on the BSE, the stock increased by about 6% to Rs 833.05 per share. The counter is still selling at a discount of more than 57 percent from its 52-week high price of Rs 1961.05.

What Should Investors Do Now?

According to analysts at Yes Securities, “Traction for the core Payments Services business was very broad-based with both the Consumer and Merchant sub-segments contributing Rs 5.19 bn and Rs 5.57 bn, respectively, rising 73% and 67% YoY. For the quarter, financial services revenue increased 4x YoY to Rs 2.71 billion.

The firm reported an improvement in net payments margin as follows: “Gross Payments

(1) The company’s ability to obtain better rates from banks was the primary factor in the margin improvement. (2) Better transaction routing optimizations, particularly for wallet loading via UPI (3) Greater profitability in the online payments sector as a result of account optimization.”

Paytm was upgraded by brokerage firm Yes Securities from “Reduce” to “Neutral.” The firm updated its target price for the stock to Rs 850 per share in recognition of a better trend. Compared to Friday’s closing share price of Rs. 784, there has been an increase of 8%.

While JP Morgan maintained an overweight rating with a target price of Rs 1000, Morgan Stanley maintained an “equal weight” rating and increased its target price from Rs 675 to Rs 785 per share.

CLSA suggested a Sell, citing a significant drop in processing costs as the main surprise. Although the stock factors in a long-term Ebitda trajectory that we believe is challenging to attain, even if our projection for Ebitda breakeven is similar to that of management. We continue to have a SELL rating,” it stated. It’s interesting to note that CLSA raised its target price for Paytm from Rs. 500 to Rs. 650.

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