Paytm’s stock rose for the second consecutive day, 20% upper circuit for buying and selling?

while writing, Paytm 9.81% in shares or to trade at 54.75 612.75 per share on BSE. Its market cap is around 39,787.96 crores.

Earlier today, Paytm shares hit upper circuit of 20 per cent in early trade. 669.60 each.

Paytm shares have started with a bang after the third quarter. share price on monday 558 on Dalal Street gained 6.31%.

Digital financial services provider’s consolidated net loss narrows sharply 392 crores in December 2022 quarter against the loss of 778.4 crore in the same period a year ago. Meanwhile, revenue climbed 42% 2,062.2 crore in Q3FY23 Vs. 1,456.1 crore in Q3FY22, driven by continued growth seen in loan disbursement and commerce business as well as consumers and subscription services by merchant partners.

Paytm founder and CEO Vijay Shekhar Sharma said the company has achieved its operating profit target excluding ESOP cost during the December quarter.

Fintech achieves an operating profitability milestone with EBITDA before ESOP cost 31 crore, well ahead of its guided timeline of September 2023.

Brokerages such as Citi, CLSA, and Goldman Sachs have buy recommendations on Paytm stock post Q3FY23 earnings, while BofA has maintained its ‘neutral’ rating on the stock.

Most brokerages raise target prices in Paytm:

CLSA analysts in their report said, “Paytm had a strong performance in 3QFY23 as it posted positive EBITDA (excluding ESOP costs), beating its own guidance of break-even by a margin of three quarters as of Sep-23.” Also, the company did not register any UPI stimulus in 3QFY23, unlike 3Q22, which means that the Rs1.3bn top-line guidance for 4QFY23 is already confirmed above normal run rate. Thus, The positive EBITDA journey is likely to continue.

Further, CLSA said, “Net payment margin (excluding subscription revenue) was largely stable at 8bp QoQ on an adjusted basis. Lending segment posted strong growth of 28% QoQ in revenue on the back of strong execution. Commerce revenue Also surprised positively. , up 50% QoQ with a strong seasonal push.”

After a strong third quarter, CLSA is upbeat on the fintech giant. On valuation, it said, “Merchant device subscription business saw sustained business as Paytm added 1 million devices in 3QFY23, in line with our prior guidance. We raise our Ebitda ex-ESOP cost estimates for FY25-26CL to 14-20%.” and increases our DCF-based target price to Rs 750, representing 43% upside. We reduce risk-free rate in line with our new country macro estimates and lower cost of equity. We reiterate our Buy rating Are.

Citi’s note said, “Our SOTP implies 36x EV/Adj EBITDA at March 26E. The stock trades at 16x, a ‘beat’ in our view given the growth trends and solid profitability.” This Q , with the potential for a strong profitability trajectory ahead (Figure 14). On a relative basis, the stock trades at a substantial discount to Indian consumer internet peers (Paytm at 16x vs 16x).

Zomato/Nykaa at 20x/27x on FY26E EV/Adj EBITDA). Purchase.”

Citi raised its target price on Paytm 1,061 per share from earlier 1,055 per share.

Meanwhile, Goldman Sachs expects investor debate to center around Paytm’s ability to sustain industry-leading growth rates while maintaining credit metrics, and if margin expansion can continue from here.

Currently, Paytm’s valuation multiple is at a discount to its peers.

Maintaining ‘Buy’ rating, Golman raised its FY24/FY25 Adjusted EBITDA estimates for Paytm by 30%/14% based on fairly strong 3QFY23 (Dec 22) results, and target price of Rs1,150 (from Rs 1, 120).

“We expect not only to remain profitable, but with continued strong traction in disbursements, operating leverage and UPI reimbursements in Mar ’23, we expect Adjusted EBITDA margin to expand to 6% in Mar ’23 (vs Dec +2%) in ’22), with c.US$190 mn in Adjusted EBITDA by FY25, the highest in our India Internet coverage. We see Paytm reporting Adjusted EBITDA profitability as a key catalyst for the stock, And expect net income profitability in FY25. Goldman’s note said.

On the other hand, BofA Securities has ‘Neutral’ recommendation on Paytm. Its note said, “We are optimistic on fundamentals and see room to aggressively scale Paytm without any balance sheet risk. While Paytm has key differentiating factors versus peers, overall high competition and additional There are regulatory risks, we expect a slow pace for monetization. Delayed EBITDA breakeven. In our view, the lending business offers an upside option to Paytm giving Paytm room to scale subject to execution.