Paytm parent One97 Communications’ shares hit a fresh low on Monday. On BSE, the Paytm stock fell as much as 3.9 percent to Rs 801 – its lowest intraday level recorded since a November 2021 listing. At this level, One97 shares changed hands at a discount of 62.7 percent to the issue price.
The stock is currently trading more than 55 per cent lower than its all-time high of Rs 1,961.05. It opened a tad lower at Rs 830 against the previous close of Rs 833.5 on the BSE. The stock is down over 38.5 per cent on a year-to-date basis.
Stocks of new-age businesses such as Paytm have seen a series of losses in the past few months, mirroring the trend on the Nasdaq, where investors have lost appetite for highly valued tech and platform companies.
What Analysts are saying?
Domestic brokerage and research firm ICICI Securities has initiated coverage on Paytm stock with a Buy rating. Shares of Paytm, which made its stock market debut in November last year, are down about 48% since listing and have declined around 39% in 2022 (year-to-date or YTD) so far amid a spate of bearish views on valuation concerns.
It said that One 97 Communications’ two-sided digital ecosystem of 6.4 crore average monthly transacting users (MTUs) (as of December 2021) from more than 35 crore consumer base and over 2.5 crore merchants are core to its unit economics.
ICICI Securities forecasts the Vijay Shekhar Sharma-led company’s intrinsic business value at about Rs 94,000 crore. That, on a lifetime customer value of Rs 2,000 from every monthly transacting user and Rs 29,600 per merchant, anticipating enriched unit economics following positive payment business contribution and scale-up of financial services.
The brokerage also expects Paytm’s merchant gross merchandise value to grow at an annual rate of more than 36% over FY22-26. It seems the company’s cloud business and e-commerce offerings to grow at over 30% CAGR till FY26, while the financial services arm’s revenue to grow at 57%.
Global brokerage firm Goldman Sachs also reiterated a Buy rating for the Paytm stock and kept its target price unchanged at Rs 1,460 apiece, implying a 75% upside. The brokerage said it believes the current share price offers a compelling entry point into India’s largest and amongst the fastest growing fintech platforms.
“We see risk-reward for Paytm as skewed to the upside, with 151% upside in our bull case vs 2% downside in our bear case. Our analysis suggests the stock is now pricing in significant regulatory, competition as well as execution headwinds, which we view as unwarranted,” it said in a note Monday.
“Paytm trades at c.6x FY23E EV/Sales, a c.15% discount to global fintech peers; however, Paytm’s revenue growth, at 35% FY22E-25E CAGR, is higher vs global peers at 28%,” it added.