JM Financial reinitiated coverage on the stock with a ‘buy’ rating and a target price of INR 1,250, signalling an upside potential of 39% from the stock’s last close
The brokerage expects Paytm to achieve adjusted EBITDA profitability in Q4 FY25 and a profit after tax (PAT) breakeven in FY26
Paytm posted a consolidated net loss of INR 208.5 Cr in Q3 FY25 on an operating revenue of INR 1,827.8 Cr
Shares of Paytm surged 2.2% in early trading hours to INR 919.45 apiece on the BSE today (January 20) after brokerage JM Financial reinitiated coverage on the stock with a ‘buy’ rating, citing the fintech major’s distinguished positioning across its business segments and higher monetisation potential.
The brokerage gave the stock a target price of INR 1,250, which implies an upside potential of 39% from its previous close.
Paytm not only boasts one of the largest merchant bases but is also able to monetise this merchant base across device subscription and commission on payments and loan disbursals, analysts at JM Financial said, highlighting that the company is “transforming challenges into opportunities.”
Paytm had a monthly transaction user base of 71 Mn as of the quarter ended September 30, 2024 (Q2 FY25), which is expected to see significant growth with the company receiving approval from the National Payments Corporation of India for new UPI user acquisition in October last year, according to the brokerage.
“We see Paytm on the cusp of rampant network effects with rising user/merchant acquisition along with significantly improved monetisation. The resulting topline growth would enable steep margin expansion with the company having already delivered marginal incremental profitability of 30%+ across FY21-24,” said JM Financial.
The brokerage noted that Paytm has reevaluated its business models following the regulatory action against Paytm Payments Bank last year and continues on a sustained recovery path.
It expects Paytm to achieve adjusted EBITDA profitability in Q4 FY25 and a profit after tax (PAT) breakeven in FY26.
Paytm managed to trim its consolidated net loss by 6% to INR 208.5 Cr in Q3 FY25 from INR 221.7 Cr in the year-ago quarter.
Revenue from operations declined 36% to INR 1,827.8 Cr during the quarter under review from INR 2,850.5 Cr in the year-ago period.
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