Paytm shares: JP Morgan sees big upside in One97 Communications stocks. Should you buy?
Premium- Paytm share price today is ₹638.50 apiece, which is around 70% lower from upper price of One77 Communications IPO
Paytm share price today is around 70 per cent lower from its upper price band of ₹2150. The One97 shares have been nosediving ever since it listed on Indian bourses and has remained an ideal 'sell on rise' stock for Dalal Street bulls. However, after hitting the life-time low of ₹510 on NSE, One97 share price has bounced back giving a ray of hope to its positional investors. According to JP Morgan report, Paytm share price is set to give some sharp upside movement and it may regain four-digit price by end of March 2023.
On valuations of Paytm shares, JP Morgan research report said, "We value PAYTM using a DCF valuation baking in rising cost of capital with a 18.5% COE and 20x exit multiple that implies a Rs1,000 PT. This is supported by a SOTP valuation benchmarking EV/Sales multiples to global peers at 4x/10x/4x/8x for its Payments/Financial Services/Commerce/Cloud businesses."
On fundamentals of the company that may fuel Paytm share price rally in next six months, the brokerage said, "PAYTM is the leading “fintech horizontal" in India, having built more sources of monetization across payments, commerce and financial services than all of its competitors. This gives it the unique ability to drive monetization and profits across several segments at lower CAC vs peers."
"We expect PAYTM to see strong revenue growth across all its business segments thanks to device monetization in payments, financial services cross-selling, ticketing recovery and rising ad monetization. We see revenues growing at a >40% CAGR over F22-26 to ~$2.8bn and CMs rising to 44% by FY26E. We see it retaining the highest revenue and profit levels among local vertical and global horizontal peers," the brokerage report added.
On its suggestion to stock market investors, JP Morgan report says, "We value PAYTM using a DCF valuation baking in rising cost of capital with a 18.5% COE and 20x exit multiple that yields a Mar-23 PT of Rs1,000 . This is supported by a SOTP valuation benchmarking EV/Sales multiples to global peers at 4x/10x/4x/8x for its Payments/Financial Services/Commerce/Cloud businesses."
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Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint.
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