Paytm Shares Decline Over 3% After Weak Q4 Results

Fintech major Paytm’s shares declined 3.43% during Thursday’s (May 23) session, closing at INR 356.20.

This comes after 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.

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.

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.

Meanwhile, brokerage firms anticipate further challenges ahead for the stock, however, most have a cautiously optimistic stance on Paytm’s recovery.

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 Rs 400, which implies 2.3 times FY26E P/Sales,” it said with a ‘neutral’ rating.

Paytm reported a weak quarter after regulatory actions forced a severe course correction, resulting in multiple strategic changes by the company to enable long-term sustainable growth while adhering to robust governance and compliance standards, the brokerage said.

“Loan disbursement thus declined sharply even as GMV was better than our estimate. Most KPIs, e.g., value of loans, MTUs and revenue growth, exhibited softness and the management suggested that business metrics will bottom out in 1QFY25 and start improving thereafter. Merchant attrition was lower than estimated and the company added merchants in 4Q despite business uncertainties,” it added.

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.

The stock has tumbled about 54% from INR 761 on January 31.