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Paytm’s Parent Firm Witnesses Stock Surge Prior to Q2 Outcome; Investors Anticipate Positive Results.

Shares of Paytm’s Parent Company Rise Ahead of Q2 Results

Positive Performance Expectations Drive Increase in Paytm’s Shares

Shares in One97 Communications, the parent company of Paytm, experienced a surge of over 2% on Friday, reaching a high of Rs 998.3 per share. This increase comes just before the announcement of their Q2 results and is fueled by strong performance expectations for July-September. The company’s robust loan disbursals and credit business growth are key factors contributing to these optimistic projections.

Jefferies Predicts Potential Gains and Profitability for Paytm

Global brokerage firm Jefferies initiated coverage on Paytm with a buy call and a target price of Rs 1,300. They anticipate a potential gain of over 34% and expect the company to achieve profitability within the next four quarters. Jefferies valued Paytm at 3.6x FY25 EV/revenue, further emphasizing their positive outlook on the company’s future.

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Motilal Oswal Projects Significant Revenue Growth for Paytm

Motilal Oswal has projected a 36% year-on-year operational revenue growth for Paytm, estimating it to reach Rs 2,600 crore. Additionally, they anticipate an adjusted EBITDA of Rs 180 crore and a substantial reduction in net loss to Rs 280 crore from Rs 570 crore in Q2 FY23. These projections have led Motilal Oswal to issue a buy call on Paytm’s stock.

Paytm’s Shares Surge Despite Widening Net Loss

Over the past year, Paytm’s shares have experienced a remarkable surge of over 50%. The share prices have ranged from Rs 438.4 to Rs 998.3 per share. Although Paytm’s net loss has widened sequentially in Q1FY24, the overall trend suggests a positive trajectory in the company’s financial health.

Paytm’s Financial Metrics and Market Cap

Paytm currently has a market capitalization of $71.8M USD and a P/E ratio of 7.77. According to InvestingPro data, the company’s revenue for LTM2023.Q2 stands at $55.28M USD, indicating a growth rate of 1.59%. However, the quarterly revenue growth for FY2023.Q2 has decreased by 33.07%. Paytm’s gross profit for LTM2023.Q2 is $23.14M USD, with a margin of 41.86%.

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Confidence in Paytm’s Future and Revenue Growth Concerns

Notably, Paytm’s management has been aggressively buying back shares, demonstrating their confidence in the company’s future. However, it is important to acknowledge that Paytm’s revenue growth has been slowing down recently. Despite being a prominent player in the Financial Services industry, analysts do not anticipate the company to be profitable this year.

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