As Paytm races towards operational profitability, analysts have turned even more optimistic about the prospects of a recovery in the stock. The shift in sentiments comes as the company’s December quarter operating performance update showed total GMV processed through its platform aggregated to Rs 3.46 lakh crore ($42 billion) in the quarter, marking a 38% YoY growth.
The company’s leadership in offline payments strengthened with the deployment of 5.8 million devices as of December. Additionally, Paytm reported disbursing loans worth Rs 3,665 crore, or $443 million, for the month.
Market veteran and founder of Helios Capital, in an interview with a TV channel, said, Paytm was among the 4-5 stocks that he invested in last month. Speaking to another channel, he said, “So now we are betting again on these two (Paytm and Zomato) having now believing that they are survivors, that their competitors have run out, that the people who were funding the competitors have given up because in every business whether it was home food delivery or whether it was fintech they were like 50 start-ups in fintech and maybe five start-ups or more in delivery and those things have run out.”
According to data compiled by Bloomberg, Paytm has buy or equivalent ratings from eight out of the 12 analysts tracking the stock, the highest number of such calls since its trading debut. The stock is up nearly 30% from its recent lows.
“These guys are long-term survivors, plus the stocks had been beaten up enough. They are not really making losses anymore and also they both have nearly a billion dollars of cash,” Arora added.
Pashupati Advani, Founder and Chairman of Global Foray, too sounded bullish about Paytm. Among the new-age listed tech stocks, he said Paytm is the only company currently worth buying.
“I put Paytm at the front of the list among the big new-age stocks. I did nibble into it at these levels. I think I am at break-even or slightly down. Nykaa has been quite badly hit, Zomato is okay, and Paytm I think is the winner of all. It is definitely worth nibbling at these levels.”
“Paytm continues to be on track for its profitability plans, with robust revenue growth driven by its strong business model. We are anticipating good Q3 results from the company. With Chinese shareholding reducing, as Alibaba pares its stakes across tech companies in India, it is good news for investors,” said Rahul Sharma, from Equity99 Advisors.
Paytm’s revenue from operations jumped 76% in the September quarter to ₹1,914 crore, driven by an ‘increase in merchant subscription revenues, growth in bill payments due to growing MTU (monthly transacting users) and growth in disbursements of loans through its platform. The company is on track to achieve EBIDTA before ESOP costs profitability by its stated timeline of September 2023.
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