21 Feb , 2022 By : Kanchan Joshi
Domestic brokerage and research firm ICICI Securities has initiate coverage on Paytm stock with Buy rating. Shares of Paytm, that made stock market debut in November last year, are down about 48% since listing and have declined around 39% in 2022 (year-to-date or YTD) so far amid a spate of bearish views on valuation concerns.
“Paytm calls for evaluation and assessment quite differently and distinctly, especially given: Management’s high growth aspirations calling for significant investments and cash burn, rapidly evolving business model (proven leadership in payments but monetising it through financial services still at a nascent stage, highly competitive landscape with low switching cost and leading players with deep pockets getting aggressive," the brokerage note stated.
The brokerage's Buy rating on Paytm shares comes with a target price of rs1,352 apiece, implying a potential upside of over 64% from its current level. Though, below expected monetisation through financial services business and unfavourable regulatory outcomes to act as key risks, as per the brokerage.
Further, regulatory uncertainties with some conducive initiatives and a few unfavourable outcomes including revision in charges on payment instruments, vigilance on digital lending etc, ICICI Securities highlighted.
Earlier this month, data compiled by Bloomberg suggested that Buy recommendations on One 97 Communications Ltd., the operator of Paytm, outnumbered the sell ratings in the first week of February, since its dismal listing. Still, the shift in analyst sentiment may provide little comfort to investors who have seen Paytm shares lose more than half of their value since listing.
For the third quarter ending December 2021, Paytm posted a consolidated loss to Rs778.5 crore in the December 2021 quarter, widening from rs535.5 crore in the year-ago quarter. Though, its consolidated revenue from operations increased by about 88% to rs1,456 crore from Rs772 crore year-on-year (YoY).
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