Paytm share price jumps 8% ahead of Q1 earnings, brokerages recommend Buy - check price target

Paytm share price: Ahead of its results on August 5, shares of One-97 Communications - the parent company of Paytm, jumped over 8 per cent to Rs 814.55 per share on the BSE intraday during Wednesday’s session. Brokerages believe that the company will report improved numbers in the June quarter of the financial year 2022-23. 

With steady loan disbursements and new device addition, YES Securities expects Paytm to post healthy sequential growth in revenue. However, RBI's embargo on customer additions for the Payments Bank on March 11 would have its impact, it added. 

The brokerage arrives at overall growth in revenue from operations of 17.5 per cent quarter-on-quarter (QoQ), while over 100 per cent year-on-year (YoY). It forecasts an improvement in Payment Processing Charges (PPC) as a proportion of Payments Revenue at 72 per cent a metric QoQ. 

YES Securities also see Total Expenses (ex PPC) growth of 11 per cent QoQ, resulting in an EBITDA margin of negative 39.8 per cent, which shows an improvement of 750 bps QoQ. 

Global brokerage Goldman Sachs believes Paytm’s operating performance has consistently remained strong and forecasting a third consecutive quarter of around 90 per cent YoY revenue growth in Q1. 

The brokerage remains a Buy rated on Paytm with a target price of Rs 1,050 per share (almost 40% upside) and believes the current share price continues to offer a compelling entry point into India’s largest and amongst the fastest growing fintech platforms. 

Contribution profit and EBITDA should improve as the share of higher-margin financial services business increases in revenue mix and as scale benefits lead to lower cost ratios, Axis Capital said, initiating a BUY rating with a target price of Rs 940 per share, upside of around 25 per cent. 

The counter is trading at over 60 per cent discount from its life high level of Rs 1,961 per share touched during the listing of stock on November 18, 2021, while it hit a 52-week low of Rs 511 per share on May 12, 2022.