Analysts at JM Financial upgraded the stock to ‘buy’ with a price target of Rs 600 – implying an 11% up move from the current levels.
“While we have remained cautious on Paytm’s business model since our initiation,” said JM Financial in a note to clients. “…its operating metrics are gradually improving with management’s focus on increasing efficiencies and profitability, which in turn should aid Paytm achieve EBITDA breakeven by FY26E, in our view.”
“Further, Paytm’s stock price has corrected by 77% since its IPO (last year) which has made risk reward favourable for Paytm,” it said.
US investment bank Morgan Stanley maintained its ‘equal weight’ rating on the stock with a target price of Rs 695, while CLSA maintained its buy rating and a target price of Rs 650 – meaning a 21-29% upside from here.
Paytm has led the
rout in shares of India’s new-age businesses last month as investors, predominantly institutional, are dumping their holdings, raising concerns how much more would these stocks fall.
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It touched an
all-time low of Rs 439.60 on November 24 but has recovered almost 25% since then.
“On profitability, it expects to become free cash flow positive in the next 12-18 months, which is in line with our view of cash burn ending in the next 4-6 quarters,” said CLSA in a client note. “The company believes its net payment margin will not be impacted materially even if there is a reduction in MDR rates.”
ICICI Securities also maintained a buy rating with a price target of Rs 1,285 – 1.4 times the current price.
Early last week, brokerage firm Macquarie sounded warning bells for Indian fintechs and non-bank lenders such as Paytm and Bajaj FinServ from the entry of Jio Financial Services.
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