Paytm Shares Continue To Bleed, Tanks Over 4% On Friday

Shares of One97 Communications, the parent entity of fintech giant Paytm, continued downward trajectory on Friday (May 24) after its March quarter (Q4) results. Paytm stocks declined over 4% during Friday’s session, touching INR 339.00 a piece.

At 11:00 AM on Friday, the shares were trading at INR 340.15, as compared to the previous close at INR 356.20.

Paytm’s net loss widened over 3X on an year-on-year basis to INR 550.5 Cr in the March quarter (Q4) of the financial year 2023-24 (FY24) from INR 167.5 Cr reported in the year-ago period.

This was the first quarterly result of Paytm after the Reserve Bank of India (RBI) barred Paytm Payments Bank from onboarding new users and from offering various services including UPI payments and deposits.

The revenue from operations decreased by 2.9% YoY to INR 2,267.10 Cr, compared to INR 2,334 Cr in the same period last year, and a 20% decline from the previous quarter.

Motilal Oswal has revised its earnings estimates downward and predicts that Paytm will reach EBITDA breakeven by FY26.

“We value Paytm based on 15 times FY28E EBITDA and discount the same to FY26E at a discount rate of 15 per cent. We thus value the stock at INR 400, which implies 2.3 times FY26E P/Sales,” it said.

Paytm experienced a challenging quarter due to regulatory actions that necessitated significant adjustments. In response, the company implemented several strategic changes aimed at ensuring long-term sustainable growth while maintaining strict governance and compliance standards, according to the brokerage.

In addition, Yes Securities has maintained its recent ‘BUY’ rating with a revised price target of INR 450:

“Over and above the impact of business discontinuation, the incremental impact on EBITDA due to the temporary disruption in operations would amount to INR 1-1.5bn in 1QFY25. There would also be an incremental EBITDA impact of INR 0.75-1bn, also in 1QFY25, due to the temporary impact of prudent measures taken,” it said.

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