After the 47% year-to-date dip seen in Paytm shares on issues across the path to profitability, Goldman sees the inventory rallying round 58% to hit Rs 1,100 within the subsequent 12 months.
The goal worth remains to be beneath Paytm’s subject worth of Rs 2,150. As in comparison with the present worth, Paytm shares are nonetheless down over 67% for many who invested within the IPO.
”We see the enterprise mannequin as persevering with to point out robust traction, and inside our web protection, view Paytm as one of the crucial compelling progress tales at a lovely worth,” Goldman mentioned in a report.
“Whereas we recognise that lock-in expiry (86% of Paytm’s excellent shares) in Nov ‘22 could characterize an overhang on the inventory, we count on Paytm to ship c.50% income progress for the subsequent few quarters and proceed its transition from an erstwhile payments-only enterprise to at least one with a robust monetary companies portfolio,” it mentioned.
With valuation at 3.6x FY24 EV/Gross sales, a 30% low cost to India web peer group, the brokerage has reiterated its Purchase ranking on Paytm and added the inventory to conviction listing.
Goldman’s evaluation suggests the present share worth is implying eventualities equivalent to zero revenues from Paytm’s BNPL product and halving of take charges for different lending merchandise, or adjusted EBITDA profitability not till FY27, or 0% income progress beginning FY33, amongst different outcomes, which is seen as “unlikely and overdone”. The brokerage agency’s risk-reward evaluation signifies 112% upside in a bull case vs 12% draw back in a bear case.
Paytm is at the moment buying and selling at 3.6x FY24 revenues, related vs world friends, however with a CY21-24E gross sales CAGR of 38%, vs 29% for the peer group.
“On EV/gross revenue, nevertheless, Paytm at 5.6x FY24 GP, trades at an 11% low cost to friends, for a gross revenue progress that’s 1.3x vs friends. Even inside India web, Paytm’s progress outlook is comparable vs peer group, however valuation is on the decrease finish,” Goldman mentioned.
Following the report, Paytm shares had been buying and selling 2 per cent larger at Rs 699.9 on BSE in a weak market. Trendlyne information exhibits that out of the 11 analysts with a protection on the inventory, 6 have purchase scores and three have promote scores with the remaining 2 calling it a maintain.
(Disclaimer: Suggestions, solutions, views and opinions given by the consultants are their very own. These don’t characterize the views of Financial Instances)