Paytm shares rise after Q3 results. Should you buy?
Premium- Paytm's Q3 revenue from operations increased by about 88% to ₹1,456 crore from ₹772 crore in the year-ago quarter
Digital payments and financial services firm One97 Communications, which operates under Paytm brand, posted a consolidated loss to ₹778.5 crore in the December 2021 quarter, widening from ₹535.5 crore in the year-ago quarter. Paytm shares recovered from opening lows as the stock was up over 2% at ₹972 apiece on the BSE in Monday's early deals.
The fintech firm's consolidated revenue from operations increased by about 88% to ₹1,456 crore during the reported quarter from ₹772 crore it posted in the same quarter last year.
Analysts at Goldman Sachs believe Paytm’s strong topline growth will help allay investor concerns around declining payments take rate in recent years. In addition, Paytm continues to gain market share across both UPI and non-UPI, and its lending business is seeing robust traction.
“Our analysis suggests the current share price is implying multiple headwinds including MDR caps, a decline in market share for Paytm, and significantly slower ramp-up of Paytm’s financial services, which we view as unlikely. With our revised target price of ₹1,460, we upgrade the stock to Buy from Neutral," said Goldman Sachs in a note.
The gross merchandise value (GMV) grew 123% year-on-year at ₹2.5 lakh crore during the third quarter. The payment services of Paytm to consumers grew by 60% to ₹406 crore from ₹254 crore and payments services to merchants more than doubled.
"We believe Paytm remains well-positioned to capture share of digital payments in India and view Paytm’s business model as characterized by network effect," Goldman Sachs added.
Paytm, which made a dismal debut on stock markets in mid-November, has seen its share price more than halve against the issue price on repated concerns over valuation from analysts.
Sumeet Bagadia of Choice Broking believes that if Paytm stock breaks above the ₹1,000 level then there's more upside possible on the counter.
MINT PREMIUM See All
The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
Never miss a story! Stay connected and informed with Mint. Download our App Now!!