Paytm: Analysts foresee a festive season-led boost for the payments industry.
- SUMMARY
- Paytm could announce double-digit year-on-year revenue growth in Q3FY24.
- The firm is scheduled to release its Q3 earnings on January 19.
- Dolat Capital rates Paytm as ‘Buy’ and sets a target price of Rs 1,320.
Analysts on Dalal Street anticipate Paytm will record double-digit YoY revenue increase in the quarter ending December 31. According to Dolat Capital, the largest digital payments platform could raise revenue by 35.10% year on year (YoY) and 10.70% quarter on quarter (QoQ) in Q3FY24. It also calculated that the company’s net loss had shrunk to Rs 255.30 crore, owing to improved overall operating performance. The company lost Rs 290.50 crore in the prior quarter ended September 2023, and Rs 392 crore in the equivalent quarter ended March 2023.
Investors should focus on the loan business, merchant business, and consumer payment business scale-up in Paytm’s upcoming results. Dolat Capital also anticipated that Paytm might post an EBIT loss of Rs 397.70 crore in Q3 FY24, compared to an EBIT loss of Rs 411.1 crore in Q2 FY4 and an EBIT loss of Rs 454.70 crore in Q3 FY23. The firm is scheduled to release its Q3 earnings on January 19.
ALSO READ: Unlocking Success: A Comprehensive Guide On How To Hire The Right Person
“Paytm’s Q3 will see festive season-led strong payments business growth while optimising operational performance,” Dolat Capital said in research, retaining a ‘Buy’ rating on the company with a target price of Rs 1,320. This shows a 77% increase over the current market price of Rs. 743.95.
On the other hand, YES Securities forecasted a 32% YoY and an 8.1% QoQ increase in Paytm revenue in Q3 FY24. Paytm, on the other hand, is expected to lose Rs 280 crore in the current quarter.We assume a 6% QoQ increase in payments services to consumers, 12% QoQ growth in payments services to merchants, and 6% QoQ growth in financial services and others to arrive at 8.1% QoQ growth in revenue from operations.
Payment processing charges (PPC) as a percentage of payments revenue are expected to be 54.5 percent, up from 54.4 percent in 2Q FY24.”We arrive at a total expenses (ex PPC) growth of 6% QoQ, compared to 3% in 2QFY24, resulting in an EBITDA margin (ex-other income and after ESOP cost) of -8.3%, an improvement of 89 basis points QoQ,” YES Securities stated. The firm rates Paytm as ‘Add’, with a target price of Rs 775.
On the other side, on January 15, UBS initiated coverage of Paytm with a target price of Rs 900. The worldwide corporation stated in research that Paytm’s high top-line CAGR of 54% in FY21-24E was powered by its core payment business and bolstered by device and loan origination monetisation. Its profitability dynamics have improved as well, with a contribution margin of 50% of revenue and positive EBITDA (ex-ESOP costs). We anticipate a moderate 21% top-line CAGR in FY24–28, with operating leverage resulting in eased marketing expense requirements and moderate ESOP costs. As a result, we anticipate the company breaking even on EBITDA in FY25 and achieving a 20% EBITDA margin by FY28.
Click here to check out the latest post on Instagram.
Also read: Top 5 Podcasts Every Future Business Owner Should Listen To
image source: google
