Paytm shares: Global brokerage JPMorgan has started coverage on Paytm’s parent company One 97 Communications. Shares of Paytm have lost 38 per cent following the weak listing and is facing bearish trend, weak performance of Nifty and trading at a discount to global and private peers.
Analysts from the global brokerage firm said in a note on Tuesday, “We recognize Paytm as a distinct ‘Fintech Horizontal’, considering its ability to drive monetization across categories and meet its Consumer Acquisition Cost (CAC) across various products.” see as.” On Tuesday afternoon, the stock of Paytm is trading at a level of Rs 1,322 with a weakness of 1.30 percent (12.30 pm).
JPMorgan expects good business till FY2025
According to JP Morgan, Paytm has the potential to grow nearly 60 per cent revenue and 10x profit in FY21-24, bringing the company to a cash breakeven in FY25 and providing decent free cash. JPM’s overweight stance on Paytm has come with a target of Rs 1,850 per share.
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Credit loss cycle unclear
In JPM’s view, its core risk is credit loss in the lending business (though Paytm does not record credit risk in its accounts). The note said, “Given the low ticket size of lending and an unsustainable book, a complete credit loss cycle in the portfolio is unclear. We are less concerned about competitors as most are focused on non monetized UPI business or vertically focused fintechs which account for a small portion of Paytm’s revenue.”
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A big brokerage has given a bullish rating
Morgan Stanley, another top broker, said in a note dated December 23 that it has started coverage on shares of digital payments startup Paytm with an overweight rating and a target of Rs 1,875. She sees attractive risk-to-reward and value on the company. With a valuation of $17 billion to the brokerage, the stock looks attractive compared to its risk appetite.
Several analysts, including Sumeet Kariwala, wrote in a note that with the company hitting operating profit levels in FY2025, “profitability should improve rapidly as financial services grow.”
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