Paytm woos another bear! Macquarie raises share target price by 80%

NEW DELHI: After releasing several bearish reports on Paytm, global brokerage firm Macquarie has given a double upgrade to the stock and raised its target price by 80% to Rs 800.

"Our view at Rs 2,150 is different from our view when the stock is priced around ~Rs 600. Since our last target price cut, Paytm has positively surprised on the distribution of financial services revenue by a wide margin and has also managed to control overall expenses and charges," Macquarie analysts Suresh Ganapathy and Param Subramanian said.

The analysts had last year given a target price of Rs 450 on the stock with an underperform rating. They have now raised Paytm's FY23–26E revenue estimates by 33–51% and given the stock a double upgrade to outperform.


"Our channel checks with some of the largest lenders/partners of Paytm reveal that the performance of post-paid (95%+ by volume), as well as personal loans, continues to be pretty robust, and the company has now seen several repeat purchases/transactions over the past 12 months, which assures us of the quality of these loans," Macquarie said.

ALSO READ: Why has Macquarie flipped its Paytm view and raised the stock price target?

Because penetration of post-paid loans and personal loans is just 4% and 0.8% of MTU (monthly transacting users), respectively, the leeway is significant for PayTM to sustain robust growth for the foreseeable future, it said.

In its December quarter results, Paytm had turned positive at the operating level three quarters ahead of its guidance. The fintech's consolidated net loss narrowed to Rs 392 crore in Q3.

The quarterly numbers have left investors bullish with many brokerages raising their target prices. In the last 5 days, the stock is up over 18%.

During the day, the stock rallied over 9%. Paytm has, however, been among the biggest wealth eroders of 2022 and is still down over 70% from its IPO issue price of Rs 2,150.

In its monthly business update for January released today, Paytm said its average monthly transacting users during the month rose 29% YoY to 89 million. "We continue to strengthen our leadership in offline payments, with 6.1 million merchants now paying subscription for payment devices, an increase of 0.3 Mn in the month of January 2023," it said.

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