Paytm share price surges to near 6-month high post Q1 results. Should you buy, sell or hold?
Premium- Paytm share price: CLSA has improved its sell price target from ₹500 to ₹650 apiece levels
Paytm shares are attracting huge buying interest by stock market bulls today. After announcement of rise in revenue in Q1FY23 results on Saturday, Paytm share price surged to its highest levels in nearly six months as the stock rallied over 6 per cent to ₹830 apiece on the BSE.
However, brokerages are mixed on Paytm shares' future course of action. CLSA and JM Financial has given 'sell' tag to the recently listed stock whereas Dolat Capital sees big upside in the counter. As per CLSA report, Paytm shares may go down to ₹650 apiece levels from its current highs whereas Dolat Capital believes that the stock may go up to ₹1400 per share levels in long term.
CLSA gives 'sell' tag
On Paytm share price target, CLSA report says, "1QFY23 was a continuation of prior quarter trends for Paytm with GMV growth of a healthy 14 per cent QoQ, while cross-selling of merchant devices and loan distribution remains the key focus and incremental driver of EBITDA breakeven. Most P&L numbers were largely in line with our expectations, while payment processing costs were significantly lower. This led to 13bp net take-rate in 2QFY23 itself, while we were expecting it to happen in FY24. We lower our EBITDA loss estimates for FY23/24 by ₹3bn to ₹4bn and increase our target price from ₹500 to ₹650."
JM Financial gives 'sell' tag
"With gross margins at ~43%, we believe incremental path to monetization remains primarily contingent on reduction in indirect spends and ESOP costs for Paytm. We believe incremental reduction on payment processing charges is difficult and scale up financial services business remains the key driver for sustainable profitability where we see risks to the current take rates. We would use recent upside move in the stock price (+27% in last 2 months) as an opportunity to trim. We believe recent rally is also a function of synchronous global upside move in fintech names (Square, Adyen up over 20%+ in last month of so). Maintain SELL," says JM Financial report.
Dolat Capital sees 70% upside
However, Dolat Capital sees big upside in the counter. It believes that the stock may start rising and can go up to ₹1400 apiece levels in long term.
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"Strong Q1 with robust growth as well as cost optimization clearly indicates Paytm’s ability and intent to achieve Cash-EBIDTA Breakeven by H1FY24, thus making a strong case for re-rating, as the financials play out on guided path. We maintain our Buy rating on the stock with a TP of Rs. 1,400," says Dolat Capital report.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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