Paytm announced on Wednesday that its lending business grew by 471 per cent year on year in the two months ending May 2022.
The stock was trading at ₹634.15, up 2.76 per cent from its previous close of ₹617.10, at 12:30 p.m. The stock gained 2.4% in the last week and 16.1% in the last one month. It commands an m-cap of Rs.40,863.2 crore compared with an m-cap of Rs.1,01,399.72 crore as of its listing day, November 18. The stock has dropped 70% from its IPO price.
The company said its lending business witnessed rapid growth, with 5.5 million loan disbursals during the two months ending May 2022 (y-o-y growth of 471%). Aggregates to a loan value of ₹3,576 Cr ($476 million) in the first two months of the quarter (y-o-y growth of 829%).
It reported the average monthly transacting users on the Paytm Super App at 74.3 million for the two months ending May 2022, up 48% y-o-y. For the two months ending May 2022, merchant payment volumes (GMV) increased by 105% year on year to ₹1.96 lakh cr ($26.2 billion).
The firm said its leadership in offline payments continued with the deployment of 3.4 million devices at merchant stores across the country. The strong adoption of devices also has a correlation with the rise in merchants eligible for loans from the company's platform.
"We are also seeing increases in average ticket size due to the scale-up of the personal loans business in particular," Paytm said in a note.
Meanwhile, major global brokerage firms like JPMorgan, Goldman Sachs, and Citi research are bullish on the company.
Citi Research maintained a "buy" call on Paytm on the back of the company's steady improvement in payments monetisation and rapid scaling up of financial services. It increased its target price from ₹900 to ₹915, implying a potential upside of 48%. Citi expects Paytm’s gross profits to grow at 37 per cent CAGR between FY22-26E and contribution margins to expand from 30 per cent in FY22 to 39 per cent in FY26E.
JPMorgan, in its recent report, stated that it is bullish on the stock on the back of a reduction in adjusted EBITDA loss and better cost controls.
Goldman Sachs has also set a target of ₹1,070 on the stock, implying an upside of 68% from the current market price.
For the March quarter, Paytm's net loss widened to ₹761.4 crore as compared to ₹441.8 crore in the same quarter last year. On the other hand, revenue from operations increased 89 per cent year on year to ₹1,540.9 crore in Q4FY22 from ₹815.3 crore the previous year.
Retail investors owned a 7.72 per cent stake in Paytm as of the March quarter, up from 3.49 per cent in the December quarter. FPIs cut their holdings by 494 basis points in this company as of the March quarter.
An average of 9 analysts polled by MintGenie have a 'buy' call on the stock.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.
