Goldman Sachs has retained the “buy” rating on the stock and has set the target price of Rs 1,460 per share.
Another banker who is a lead banker for Paytm’s public offering, ICICI Securities, has begun coverage of the stock , with a ‘buy rating, and has set an estimate of 1,352 per share, which is more than 60 percent higher than the current price.
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Goldman Sach and Morgan Stanley as the leading bankers had previously initiated coverage of the shares.
At 10.30am the scrip traded at Rs 822 on BSE at 10.30am, down 1.39 percent from its previous closing. The stock has fallen more than 60% from its original price of Rs . 2,150.
The listing flop caused massive losses, not just to IPO investors, but it also raised doubts for companies that make losses in technology, despite their large valuations as well as the role of investment bankers.
In addition to ICICI Securities other bankers for the IPO included Morgan Stanley, Goldman Sach, Axis Capital, HDFC Bank, JP Morgan and CItiGroup
According to estimations, Paytm generates revenue of around 350-375 dollars per monthly transactions per users (MTU) and between Rs 1,000-1100 for merchants. It also imposes a direct costs of between 250 and 275 per MTU, and an average of Rs 750-775 per merchant. The brokerage company calculates an average lifetime value for customers of the equivalent of Rs 2,000 per MTU, and Rs 29,600 for merchants.
Superimposing this on FY24E estimated MTU and merchant base and adjusting further for fixed cost, net cash and value of associates/subsidiaries, we arrive at Paytm’s intrinsic business value of Rs 940 billion,” ICICI Securities said. “Key dangers are the fact that Paytm is not achieving its expected monetisation of financial services and unfavorable regulatory results.
The brokerage firm claims that Paytm has developed a substantial two-sided digital ecosystem, with demonstrated leadership in payments. The company has already spent $1.1 billion on promotions and marketing since FY15. The company has amassed an impressive base in the amount of 64.4 million MTUs as of the 21st of December (equivalent to over twelve percent Smartphone owners) in addition to 24.4 million merchants (over 50% of merchants who have access to the internet).
It currently holds over 40% market share in mobile payments, 25% (estimated) for P2M-related digital transactions, between 28 and 30 percentage (estimated) for UPI P2M transactions, more than 20 percent as an UPI beneficiary bank, and more than 50 percent market part in wallet transactions made through P2M.
Paytm requires evaluation and evaluation in a completely different manner and clearly, particularly in light of the company’s ambitious growth goals that call for substantial investment and burning of cash. A rapidly evolving business model (proven the leadership in payments, but monetizing it via financial services is still in the beginning of its development. Highly competitive market with low cost of switching top players with large pockets becoming more aggressive. There are regulatory uncertainties, with some favorable and a few adverse results,” ICICI Securities said.
Goldman Sachs has retained the “buy” rating for the stock, with an estimated price of 1,460 per share. Paytm continues to grow market share in both UPI and non-UPI payment segment and its lending business has seen an increase in popularity in the opinion of Goldman Sachs. Paytm’s trading price is at a discount of 15 percent to its global counterparts in fintech according to the brokerage.