Paytm Shares Fall Over 3% Intraday; Emkay Retains ‘Reduce’ Rating

Shares of Paytm slipped more than 3% during intraday trading at INR 444.30 apiece on Monday on the BSE after the fintech major took a hit to its topline in Q1 FY25, with its net loss ballooning to INR 840.1 Cr, up 134% year-on-year.

Revenue from operations also declined 36% to INR 1,502 Cr during the quarter under review from INR 2,342 Cr in Q1 FY24.

While Paytm, in its earnings release, exuded confidence that its profitability and revenue will improve going forward, Mumbai-based brokerage Emkay Global has retained its “reduce” rating on the stock, citing prolonged business losses, while also hiking the target price to INR 375 from INR 300 earlier.

Further, JM Financial has maintained its “sell” rating on the stock while hiking the target price to INR 390 from INR 300 earlier.

“Although  Paytm  has  found  alternatives  for  Paytm Payments Bank Limited, we believe on-boarding of new customers and revival of high margin  products in payments business  is  contingent on regulatory approvals, seamless migration of accounts and smooth integration. Only regaining MTU (down from 104 Mn in Jan 2024 to 78 mn in June 2024) will support declining revenue and profitability,which will take time in our view,” the brokerage said in a note.

According to Motilal Oswal, Paytm’s payment processing margin is likely to moderate as compared to the historical rate of 7-9 basis points, mainly due to the discontinuation of more profitable products.

The brokerage firm has maintained its “neutral” rating on the stock with a revised price target of INR 500.

Notably, shares of Paytm have been under selling pressure following the RBI’s crackdown on its subsidiary Paytm Payments Bank with the stock having tanked more than 42% over the laat 12 months. However, the stock is up 11.5% in the last month.

At 1:26 PM, shares of Paytm were trading at INR 459.65 apiece on the BSE, up 0.2% from the previous close.