Securities, a brokerage firm, has upgraded the target share price of Paytm, a listed fintech giant, to INR 700 while maintaining a neutral rating for the company. The brokerage firm has projected a 57.7% year-on-year and 17.8% quarter-on-quarter jump in Paytm’s Q4FY23 revenue to settle at INR 2,430.3 Cr, along with an estimated net loss of INR 307.3 Cr in the quarter ended March 31, 2023. Paytm disbursed 4.1 Mn loans worth INR 4,468 Cr in March 2023, registering YoY growth of 63% and 206%, respectively. The brokerage firm also projected an increase of 18% QoQ in Paytm’s revenue from operations, along with an improvement of 63.5% in payment processing charges as a proportion of payments revenue.
Yes Securities also projected that Paytm’s EBITDA margin would go from -21.6% in FY23 to -4.2% in FY25. Paytm’s shares rallied to an intraday high of INR 661.70, before coming down to INR 655.65 apiece at 3.10 PM on Monday, about 2% higher than the last close of INR 645.80 apiece. In March 2023, Paytm upgraded its tech stack, which is expected to increase the scale of its tech stack by 10 times. This upgrade is likely to improve Paytm’s operational efficiency and reduce the cost of processing transactions. Additionally, Paytm enabled interoperability of its wallet for UPI transactions, which is expected to bring in more revenue for the company in interchange fees. Interoperability allows customers to transfer funds between different payment platforms seamlessly, which is likely to increase the number of transactions processed by Paytm, resulting in higher revenues. In March 2023, the Reserve Bank of India (RBI) granted Paytm more time to reapply for the payment aggregator license, subject to the approval of the investments made by Paytm into Paytm Payments Services Limited (PPSL), which is a wholly-owned subsidiary of the fintech company that handles the B2B payments business. Payment aggregator license allows a company to facilitate electronic payments between various parties. This decision by the RBI is likely to give Paytm more time to resolve any issues related to its application for the license and ensure compliance with regulatory requirements.