Paytm Outlook: Today Paytm’s listing disappointed investors and got listed at a discount of about 9 percent against the IPO price of Rs 2150. In intra-day trading on the BSE, it had fallen to a discount of 26 percent i.e. Rs 1586.25. Now according to international brokerage firm Macquarie, this stock can fall up to 44 percent against the IPO price and has set a target of Rs 1,200 per share with a rating of ‘underperform’.
According to analysts, Paytm is very expensive and regulation and competition have increased the pressure on its price. This company has never been profitable and there is no prospect of it coming in profit in the coming time also, its 26 times the price to sales (P/S) estimated for FY 2023 looks very expensive. Is.
Paytm Shares Listing: Paytm’s listing disappointed, experts gave this advice to investors
Paytm not profitable in any segment
According to the international brokerage firm Paytm is in many business verticals without achieving market leadership or without making profits. At present Paytm is in the payments segment, consumer lending, payment gateway, credit card, wealth, mini application platform and ticket, but it is not making profit in any segment. The brokerage firm says that the revenue of Paytm is very less on every dollar invested or marketing spend, due to which it is like a cash-gathering machine.
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Expected positive free cash flow in FY 2029-30
According to the international brokerage firm, Paytm’s free cash flow is expected to be positive till the financial year 2029-30, not before that. According to analysts, non-payment business revenue by the distribution business is expected to grow at a CAGR of 50 percent (Compound Annual Growth Rate) in the next five years, but despite this, Paytm does not expect positive free cash flow before FY2030. On the other hand, if we talk about EBITDA break-even, then it can be expected only in the financial year 2025-26.
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Banking license may face problems due to investment of Chinese company
Many domestic brokerage firms believe that giving Paytm a Small Finance Bank (SFB) license will open more doors for the company. However, Macquarie believes that Paytm is not a practical competitor to the Universal or SFB licenses. The main reason for this is that even after the IPO, Chinese giant Alibaba and Ant Group hold 31 percent stake in One97 Communications (parent company Paytm). Apart from this, Paytm may face other regulatory problems. The central bank RBI, market regulator SEBI and insurance regulator IRDA are tightening up on service providers to reduce costs.
(Article: Kshitij Bhargava)
(The stock recommendations given in the story are those of the respective research analysts and brokerage firms. Financial Express Online takes no responsibility for the same. Investments in capital markets are subject to risks. Please consult your advisor before investing.)
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