paytm share, Foreign brokerage Morgan Stanley said it has acquired One97 Communications (Paytm) following the recent steep fall in share price and the company’s Q4 business update, suggesting a target of Rs 935 on the stock. Brokerage house Paytm parent One 97 Communications sees the stock rise up to 46 per cent, while holding its final fixed price target of Rs 935. Earlier, last month, Morgan Stanley downgraded the target price to Rs 935, and downgraded the rating to ‘equal weight’ after the Reserve Bank of India (RBI) barred Paytm Payments Bank from adding new customers due to supervisory concerns. Had given.
On Thursday afternoon, the stock was trading at Rs 627.80, down 1.41 per cent on the BSE. Morgan Stanley’s target suggests a possible 46 per cent rally in the stock.
The stock has been in the news after the company was directed to conduct EBITDA break-even operations over the next six quarters.
Morgan Stanley said Paytm is nearing the end of its current investment phase and the company is looking to reduce indirect costs. “We currently project an EBITDA break-even in F25 and will rethink our estimates after Q422 earnings. Paytm does not expect any impact on its growth trajectory due to the above,” said Morgan Stanley.
This brokerage calculates the allowance for merchant discount rate under UPI; the introduction of interchange on wallets as soon as it becomes interoperable; Better than expected performance on financial services in case of underwriting and large bank or NBFC tie-ups posing major upside risks.
Vijay Shekhar Sharma, Founder and CEO, One97 Communications, said yesterday, Paytm intends to operate an EBITDA breakeven (EBITDA before ESOP cost) by the end of September 2023.
In a letter to shareholders, Sharma, while announcing its last quarter results, said that against the backdrop of volatile market conditions for high-growth stocks globally, Paytm shares are well below the IPO price.
“Against the backdrop of volatile market conditions for high-growth stocks globally, our shares are well below the IPO price. Rest assured, the entire Paytm team is committed to building a large, profitable company and creating long-term shareholder value. Aligned with this, my stock grants will vest to me only when our market cap crosses the IPO level on an ongoing basis,” Founder and CEO Vijay Shekhar Sharma said on Wednesday.
Paytm had offered Rs 2150 per share to the public at a market valuation of Rs 1.39 lakh crore. The stock has been on a downtrend since listing in November 2021 and has fallen over 70 per cent with market capitalization falling to Rs 41,000 crore.
BSE had recently sought an explanation from Paytm on the steep fall in its share price. Shares of the company fell on higher interest rates, confusion about Paytm’s path to profitability and declining investor interest for loss-making growth companies in the light of recent regulatory actions against the company.
Paytm said its lending business grew to 65 lakh loan disbursements during the quarter, taking the total loan value to Rs 3,553 crore, up 417 per cent year-on-year. The total value of loans disbursed in March stood at around Rs 1,460 crore as compared to Rs 1,170 crore in February and Rs 920 crore in January.
Offline payments business, Paytm said, boomed with 9 million devices deployed during the quarter. The total number of deployed equipment increased to 29 lakh. This is against 20 lakh devices in the previous quarter.
Morgan Stanley noted that the RBI has placed restrictions on new customer onboarding into Paytm Payments Bank and is yet to clarify possible changes to digital payment fees. It sees little change as the latter may go up.
“In the context of US payments and fintech firms, we apply adjusted F26e EV/sales multiples of 5x (base), 4x (bear) and 6.5x (bull) and get FY25 EV, which we expect to be 13.4x in FY23 discount on. Percent WACC. We then add net cash by March 2024e,” it noted.
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