Vijay Shekhar Sharma says ‘worst behind us’, brokerages say Paytm may fall 25% more. Here's why - Hindustan Times
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Vijay Shekhar Sharma says ‘worst behind us’, brokerages say Paytm may fall 25% more. Here's why

By | Edited by Mallika Soni
May 23, 2024 03:07 PM IST

Paytm reported a drop in revenue to ₹2,399 crore in Q4 from ₹2,465 crore a year earlier and losses widened to ₹551 crore in a quarter.

Paytm founder Vijay Shekhar Sharma told shareholders in a post-earnings call that the worst is behind the company. The comments come as One97 Communications, Paytm's parent firm, reported lower quarterly revenue and a bigger loss. He said, “We learned a lot of our lessons to become better and resilient. We also resolved to be fully compliant according to the regulators expectations in letter and spirit.”

Paytm founder and CEO Vijay Shekhar Sharma during an event in Mumbai, (PTI)
Paytm founder and CEO Vijay Shekhar Sharma during an event in Mumbai, (PTI)

Read more: Paytm's Vijay Shekhar Sharma praises ‘killer next version of Google Search’

What Paytm quarterly results showed?

The quarterly results come after the Reserve Bank of India (RBI) directed Paytm Payments Bank Ltd to halt several banking activities citing consistent non-compliance and supervisory concerns.

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Paytm reported a drop in revenue to 2,399 crore in Q4 from 2,465 crore a year earlier and losses widened to 551 crore in a quarter from 168 crore a year earlier.

Read more: Paytm Q4: Vijay Shekhar Sharma tells shareholders ‘anticipate tangible results’

What brokerages said on Paytm stock?

Motilal Oswal Financial Services said that Paytm was compelled towards a severe course correction, resulting in multiple strategic changes by the company. The brokerage cut its earnings estimates and projected Paytm to achieve Ebitda breakeven in FY26 saying with a ‘neutral’ rating, “We value Paytm based on 15 times FY28E Ebitda and discount the same to FY26E at a discount rate of 15 per cent. We thus value the stock at 400, which implies 2.3 times FY26E P/Sales.”

Meanwhile, Macquarie maintained an 'underperform' rating on Paytm with a target price of 275 on the stock as it said that the full impact of RBI regulations will be felt in Q1FY25 and the company needs strong support from the lending ecosystem.

Read more: Paytm layoffs: Company warns of job cuts as revenue falls 2.7%

JM Financial put a 'sell' rating and a target price of 300 on the stock and said, “We remain watchful of the closure of small ticket postpaid business and pivot towards high ticket lending thereof. Although Paytm has found alternatives for PPBL, we believe on boarding of new customers and revival of high margin products in payments business is contingent on regulatory approvals, seamless migration of accounts and smooth integration.”

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