paragraph

Global brokerage firm JPMorgan reinstated its overweight rating on <a target="_blank" href="https://mintgenie.livemint.com/stocks/one-97-communications-S0005175">One97 Communications</a>, the parent company of Paytm, but slashed its target price. The brokerage cut the target price of Paytm to ₹1,000, down from the earlier target of ₹1,200. Despite the latest reduction, the new target price indicates an upside of 60 percent in the stock.

JPMorgan is bullish on the stock on the back of a reduction in adjusted EBITDA loss and better cost controls. It added that improved profit markets set the stage for operating leverage from the second quarter.

"We believe a sustained improvement in the profit margin contribution at Paytm seen over the last two quarters sets the stage for operating leverage Q2F23 onwards as indirect costs moderate - resulting in a consistent downtrend in Adjusted <a target="_blank" href="https://mintgenie.livemint.com/news/markets/what-is-ebitda-is-it-the-right-way-to-measure-a-firm-s-financial-performance-151639546461031">EBITDA</a> loss and an eventual path to breakeven," said the brokerage.

However, it is important to note that this target price is not even half of the issue price of ₹2,150. Paytm launched its IPO in November 2021.

Since listing, the stock has continued its decline and has not yet been able to scale its issue price even once. The stock has lost over 49 percent just this year and is currently trading around over 70 percent below its IPO price.

The brokerage further added that the lending business scale up, an increased contribution from devices and credit card sourcing should result in consistent quarterly improvement in contribution profits which should touch near 40 percent by Q4FY23.Despite the decline, the brokerage noted that the firm's sales growth and contribution profit are trending in the right direction and added that indirect cost control is key to EBITDA breakeven."Indirect cost control is the key to the EBITDA breakeven. The company has sharply increased its employee costs led by hiring in field force and the indirect cost will moderate from Q2FY23 onwards," said JPMorgan.The brokerage raised its FY23/24 revenue and adjusted EBITDA margin estimates by 1 percent/5 percent and 6pp/7pp respectively on higher estimates of better margin.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. Revenue from operations, however, zoomed 89 percent YoY to ₹1,540.9 crore in Q4FY22 from ₹815.3 crore in the year-ago period.The company's average Monthly Transacting Users (MTU), which is the number of unique users with at least one successful payment transaction in a month, rose 41 percent YoY to 7.09 crore, the company said in a statement.Meanwhile, another brokerage Goldman Sachs has also set a target of ₹1,070 on the stock, whereas ICICI Securities has a target price of ₹1,285 for Paytm. However, <a target="_blank" href="https://mintgenie.livemint.com/news/markets/what-to-do-with-paytm-macquarie-says-sell-goldman-sachs-icici-securities-remain-bullish-151653289450999">Macquarie kept its target low </a>at ₹450 as it believes profitability is still an uphill battle and that EBITDA losses may take 12 quarters to break even.Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of MintGenie.

Why JPMorgan sees a 60% upside in Paytm despite a target price cut

The brokerage cut the target price of Paytm to ₹1,000, down from the earlier target of ₹1,200. Despite the latest reduction, the new target price indicates an upside of 60 percent in the stock.

Mid-term fundamentals solid; India better placed than peers to face economic challenges: CEA

Why are Gulf countries significant to India

From Federal Bank to Sobha: Here are 15 top stocks picks by Angel One for June

RBI Monetary Policy: Here's what experts have to say

Indian bond yields rose after RBI hikes rate 

Financials turn green after RBI raises repo rate, retains GDP growth forecasts

Rural demand likely to revive starting October, say analysts

NBFCs start the year on a strong note as threats from Covid remain low: ICRA

Oil Holds Near Three-Month High as Traders Assess Demand Outlook

Market Wrap: Sensex pares intra-day gains to settle over 100 points lower

The 30-share BSE index declined 100.42 points or 0.19 per cent to settle at 53,134.35. During the day, it jumped 631.16 points or 1.18 per cent to 53,865.93.

Bank of England Says Global Outlook Has ‘Deteriorated Materially’

The Bank of England said the global economic outlook has deteriorated materially after surging commodity prices pushed up inflation around the world, posing a further downside risk in months ahead.

Vauld to be rescued? Crypto lender Nexo says plans to buy it

Nexo, which is based in London, said it would buy up to 100% of Vauld and reorganize its future operations with the aim to accelerate its deeper presence in Asia. It did not say when the deal would close.

These penny stocks defied weak market sentiment; surged over 1000% in this year 

Three penny stocks rallied over 1,000 percent in the first half of 2022 despite the ongoing volatility in the domestic equity markets.

Stock Market: Is it time to get greedy and buy shares?

<ul><li>Although there are some charts that suggests that markets may not have bottomed as yet; however, based on the past trends, they may bottom out in next few months and therefore the next 6-12 months look extremely crucial from the view of wealth creation over the next 3-4 years.</li></ul>