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Paytm Shares Soar Over 7% Post Q4 Results, Goldman Sachs Revises Target Price To INR 1,070

Paytm Shares Soar Over 7% Post Q4 Results, Goldman Sachs Revises Target Price To INR 1,070

Shares of Paytm ended 7.7% higher at INR 620 on the BSE on Monday

On Friday, Paytm reported a 41% YoY increase in its net loss to INR 2,396.4 Cr for FY22, while the loss rose 72% YoY to INR 762.5 Cr in Q4

We reiterate our Buy rating on Paytm with a target price of INR 1,070, and believe the current share price offers a compelling entry point into India’s largest, and amongst the fastest growing, fintech platforms: Goldman Sachs

Shares of One97 Communications, the parent company of fintech giant Paytm, rose over 7% on Monday despite the company reporting widening of its net loss for financial year 2021-22 (FY22) and January-March quarter.

Shares of Paytm ended 7.7% higher at INR 620 on the BSE. Intraday, the stock rose over 9% to INR 631 before giving up some of the gains. 

On Friday, Paytm reported a 41% year-on-year (YoY) increase in its net loss to INR 2,396.4 Cr for FY22, while the loss rose 72% YoY to INR 762.5 Cr during January-March quarter. The startup declared its financial results after market hours.

The stock also got a fillip as global brokerage Goldman Sach reiterated its ‘Buy’ call, raising the 12-month target price to INR 1,070 from INR 1,060 earlier.

The Q4 results exhibited another quarter of strong and improving monetisation of the payments vertical, while growth momentum for financial services and cloud businesses remain robust, the brokerage said in a report.

“Paytm’s lending business has been scaling up well, while maintaining good credit metrics, which we believe should further help allay investor concerns. Overall, we raise our topline estimates by 3-4% and expect growth momentum to sustain; we forecast 90% YoY revenue growth for Paytm in 1QFY23, with 38% FY22-25E revenue CAGR,” it added.

Goldman Sachs sees increase in scale and increasing mix of non-payments revenues to result in an improving margin trend, with Paytm reaching adjusted EBITDA breakeven by end of FY24E, with $1 Bn of cash on books by then. 

“We reiterate our Buy rating on Paytm with a target price of Rs1,070 (86% upside; was Rs1,060), and believe the current share price offers a compelling entry point into India’s largest, and amongst the fastest growing, fintech platforms,” it said.

The report comes as good news for Paytm investors as the startup’s shares have been on a decline for some time. The fintech major listed on the stock market in November last year at a price of INR 1,955. It fell to a record low of INR 511 earlier this month, wiping off nearly 73% of investors’ wealth.

Meanwhile, ICICI Securities also has a ‘buy’ rating on Paytm stock, with a target price of INR 1,285. On the other hand, global investment bank Macquarie revised Paytm’s target price to INR 450 citing issues pertaining to profitability. 

Among other listed new-age tech startups, shares of Zomato fell 1.81% to INR 57 on Monday, while Nykaa’s shares also declined 0.93% to INR 1,458.85 apiece.