Paytm stock climbs over 7% as Q3 EBITDA turns profitable. Should you buy, sell or hold now?

The reported operating profit improved by Rs 424 crore from the year-ago period, and the margin improved to 2% of revenue from -27% a year ago, due to sustained improvement in contribution profit and strong operating leverage.

Paytm parent’s consolidated revenue from operations increased by 42% year-on-year (YoY) to 2,062 crore, driven by an increase in merchant subscription revenues, growth in loan distribution and momentum in the commerce business.

Merchant subscriptions stood at 5.8 million compared to 3.8 million a year ago. The number of merchants paying subscriptions increased by 1 million sequentially.

At 10.29 am, the scrip was trading 4.7% higher at Rs 549.5 over its last day’s closing price of Rs 525. However, in the last one year, the stock has fallen about 43%.

Should you buy, sell or hold Paytm stock? Here’s what analysts say:

Goldman Sachs
Goldman Sachs reiterated its Buy rating with a revised target price on Paytm at Rs 1,150 (earlier: Rs 1,120), implying an upside potential of 109% from the current market price.

“On the back of 3QFY23 results, we lower our FY23E-25E revenue estimates by up to 3%, due to continued mix shift towards UPI and weaker than expected cloud revenues. However, our EBITDA estimates see a sharp increase on better-than-expected cost control. We reiterate our Buy rating and believe Paytm’s current share price continues to offer a compelling entry point into India’s largest and one of the most profitable fintech platforms,” it said.

Citi
Citi has a Buy call on Paytm with a target price of Rs 1,061, indicating an upside potential of 93% from the current market price.

“Paytm continues to leverage well its payments platform to drive lending distribution (+36% QoQ), with significant headroom for growth ahead, in our view. With fixed costs reined in, margins can comfortably continue to expand (expect 2%/8% in FY24/25E vs -5%/2% in FY23/3Q),” it said.

BofA Securities
Bofa maintained its Neutral rating on Paytm with a target price of Rs 730, which shows an upside potential of 33% from the current market price.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)