Paytm’s Stock Has Risen On The Announcement Of A Significant Narrow Loss

Paytm’s Stock Has Risen On The Announcement Of A Significant Narrow Loss:

Paytm’s stock jumped after the country’s biggest digital payments company reported a lower third-quarter loss on higher sales. Following late Friday’s earnings release, the stock is up as high as 7.4% in early trading Monday, its greatest intraday rise in roughly two months.

Paytm’s net loss for the December quarter fell to Rs.3.9 billion ($48 million) from Rs.7.8 billion the previous year. Operating revenue increased by 42% to Rs 20.6 billion, but total costs increased at a slower rate. Paytm ceo Vijay Shekhar Sharma committed in a July interview to move the company’s emphasis from growth to profit.

Paytm’s Stock Price:

Paytm’s shares surged 7.44 percent today to Rs 563.95, up from a previous closing of Rs 524.90 on the BSE. Today, the stock started 4.78% higher at Rs 550. Paytm shares were trading higher than their 5-day, 20-day, and 50-day moving averages, but lower than their 100-day & 200-day moving averages.

Furthermore, during the reporting quarter, the company’s EBITDA before deducting employee stock option (ESOP) cost, a proxies indicator used by new-age enterprises to establish operational profitability, was Rs 31 crore.

Paytm CEO and founder Vijay Shekhar Sharma commented on the matter, stating that the firm achieved operational profitability 3rd quarters ahead of its expectations. The firm had said that it expected to attain operational profitability by the second quarter of 2023-24.

Paytm Is Increasing Its Product Offerings:

Paytm is increasing its product offerings in order to attract more users and to persuade investors of its earning potential. Its stock had plunged after its increased $2.5 billion IPO in late 2021, owing to worries about rising losses and increased competition from Alphabet Inc’s Google Pay, Amazon.com Inc’s Amazon Pay, Walmart Inc. PhonePe, and several other fintech firms.

Paytm Will Achive It’s Next Goal Shortly:

“We will shortly reach our next goal of being a free cash flow producing firm,” Sharma wrote to shareholders in a letter on Friday.

Paytm’s Share Price Is An Attractive Point Of Entry Into India’s Largest & Most Profitable Fintech Business.

Goldman Sachs said after its third-quarter earnings, “We reduced our FY23E-25E revenue expectations by up to 3% as a consequence of the ongoing move toward UPI and lower-than-expected cloud revenues. However, our EBITDA forecasts show a significant improvement on better-than-expected cost containment as of 5 February 2023.

Our 12-month DCF/SOTP-based target price has been increased to Rs 1,150 (from Rs 1,120; WACC & terminal growth assumptions of 14% & 5% remain constant). We maintain our Buy recommendation (on the Conviction List) and think Paytm’s current share price is a tempting entry point into India’s biggest and one of the most lucrative fintech platforms.”

Operating Profit Margin Increased By 1.5%:

From the previous year, the income statement payments margins, or payments income minus processing expenses, more than quadrupled to Rs 459 crore. The operating profit margin increased to 1.5% from a year ago, when it was negative 27%.

SoftBank Group Corp. & Ant Group Co. Of China Sponsor Of Paytm:

SoftBank Group Corp of Japan and Ant Group Co. of China are among Paytm’s sponsors. The share price has been turbulent in recent months, after the expiration of a one-year lock-in period for certain stockholders on November 15, allowing them to cut their shares. After SoftBank lowered its interest in the firm in November, Alibaba Group Holding Ltd sold a 3% holding in January. Paytm’s December stock purchase did nothing to assuage investors.

Brokerage Firm Goldman Sachs Give ‘BUY’ Rating To Paytm:

Paytm’s impressive quarterly performance prompted brokerage firm Goldman Sachs to give the company a ‘buy’ rating and a target price of Rs 1,150, implying a more than twice upside potential from Friday’s closing price.

Douglas Fagin Has Quit The Board Of Directors:

Paytm said on Friday that Ant executive Douglas Fagin has quit the board of directors, citing Paytm’s rising size and maturity. Following the fintech firm’s IPO, he joined SoftBank executives in quitting the company.

Paytm said that its lending business grew further, with the amount of loans issued more than tripling year on year to 10.5 million.

The firm also anticipates the company’s profitability to remain stable as a result of solid traction in disbursals, operational leverage, and UPI reimbursements. Paytm’s adjusted margin is expected to increase to 6% in the following quarter, according to Goldman Sachs.

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