Brokerages see Paytm, India's leading payments and financial services company and the pioneer of QR and mobile payments, to post healthy growth in revenue in the first quarter of the FY24, after steady loan disbursements and new device addition. Domestic brokerage firm Dolat Capital has raised the target price on Paytm to ₹1,250 apiece on its strong numbers, the fintech pioneer reported in its June monthly business update.
Similarly, ICICI Securities has reiterated Paytm's target price at ₹1,055 apiece, maintaining buy rating, whereas YES Securities raised the target price on Paytm to ₹900 per share. While Axis Capital has maintained its buy rating on the fintech stock with target price at ₹1,000, a potential rally of 17%.
YES Securities penciled in an overall growth in Revenue from operations of 58.5% YoY, to ₹26,619 million. "We forecast Payment Processing Charges (PPC) as a proportion of Payments Revenue to be at 62%, a metric that was 54% in 4QFY23 due to UPI incentive," it added. It has also arrived at a Total Expenses (ex PPC) growth of 9% QoQ, compared with a growth of 2% in 4QFY23, resulting in an EBITDA margin (ex Other Income and after ESOP cost) of -7.8%, a deterioration of -227 bps QoQ as Paytm had received UPI incentives in 4QFY23.
"Paytm's monthly performance reported double digit GMV/MTU/Loan YoY growth in Q1, and we expect improved operational efficiency," analysts at Dolat Capital added. The brokerage firm sees Paytm's revenue at ₹22,949 million, a rise of 36.6% YoY in Q1FY24.
"Paytm's growth continues in cards, UPI ecosystem, and disbursement trends too remain strong," analysts at ICICI Securities noted. It also foresees Paytm's adjusted EBITDA of ₹720 million. "It also estimates that Paytm's Revenues from financial services to grow 12% despite 18% QoQ increase in total value of loan disbursed in Q1FY24. Paytm reported a strong May 2023 in terms of value of loans disbursed along with total subscription-paying merchants and GMV growth. MTUs remain stable, it added.
Axis Capital noted that healthy revenue growth and improvement in cash flow is likely to lead to a higher adjusted EBITDA. It estimates Paytm's Adjusted EBITDA at ₹600 mn in Q1FY24 versus ₹520 mn in Q4FY23. Moreover, it foresees Revenue from operations at ₹108 billion in the entire FY24.
Paytm has achieved a new milestone in merchant payments with 79 Lakh devices deployed while the Gross Merchandise Value (GMV) for the quarter (for three months ended June 2023) stood at ₹4.05 Lakh Cr, YoY growth of 37%. Consumer engagement on the Paytm Super App remained high with the average monthly transacting users (MTU) at 9.2 Cr, growth of 23% YoY.
Paytm posted revenues of $977.6 million or ₹7,990 crore for the entire FY23, becoming India's highest earning new-age company. Tech innovator's revenues grew over 60% on-year to inch closer to becoming a billion dollar revenue company, driven by payments monetization and growing scale of its loan distribution business.