Paytm Q4 Results: What are analysts recommending?

Fintech major Paytm recently reported its results for the Jan - Mar ‘23 period. The Noida-based unicorn company’s set of numbers were better than the previous year as revenues increased while net loss also narrowed.

Meanwhile, Paytm share price has had a rollercoaster ride since its listing. Yet, in recent times, it has showcased decent performance. In 2023 so far, the Paytm share price is up by close to 36% while over the past year it has appreciated close to 30%.

So, in light of this, how did Paytm perform in the Jan - Mar ‘23 period? What were its monthly users count? Did Paytm’s operating margins improve in the quarter? What are analysts saying about Paytm share price? Let’s try and decode.

Decoding Paytm Q4 Earnings:

Paytm revenues:

• Paytm’s revenues for the March quarter came in at Rs 2,334 crores. This denotes a growth of 51% from the previous year. 
   
• The company’s Payments & Financial services segment continued to draw the bulk of the revenues at Rs 1,917 crores, forming about 82.1% of the total revenues. Moreover, it witnessed a yearly growth of 59% from the previous year.
   
• Revenues from the Commerce & Cloud services business came in a distant second at Rs 392 crores, contributing about 16.7% of the total revenues. Notably, this segment grew by 23% from the previous year.
   
• Other operating revenues came in at Rs 25 crores, up 105% from the previous year.

Paytm gross merchandise value (GMV): Paytm reported a gross merchandise value of Rs 3.62 lakh crores for the Jan - Mar ‘23 period. This reflects a growth of 40% from the prior year.

Paytm users: Paytm’s average monthly transacting users at the end of the Jan - Mar ‘23 period stood at 9 crores, up 27% from the previous year. 

Faster growth in segments of the commerce business like e travel, movie, entertainment ticketing, deals and gift vouchers along with a rise in merchant subscriptions can be attributed as major factors that led to user growth.

Paytm loans distributed: Both the number and value of loans distributed increased from the previous year.

The number of loans distributed increased by 82% from the prior year to 119 lakhs. Similarly, the value of loans distributed witnessed a yearly leap of 253% to 12,554 crores.

Paytm margins: Paytm’s margins witnessed an overall improvement from the previous year.

• Operating margins at the end of the quarter stood at 10% which marked a stark improvement from the previous year’s figure of -24%.
   
• Contribution margin, which is a key indicator of the company’s profitability from its core operations, also witnessed growth. Contribution margin improved to 52% at the end of the March quarter, up from 35% in the previous year.

Paytm net loss: Paytm’s net loss at the end of the Jan - Mar ‘23 period came in at Rs 168 crores. This denotes a significant narrowing of losses from Rs 763 crores in the year-ago period.

Paytm dividend: Paytm did not declare any dividend during the quarter.

Paytm earnings: Analyst target price

Goldman Sachs: The renowned brokerage has a “Buy” rating on the stock with a price target of Rs 1,150. The firm reposed confidence in the company’s business model which is expected to reflect in the Paytm share price growth. Further, resolution of regulatory issues is also expected to be a tailwind, according to the firm.

Macquarie: The global brokerage has an “Outperform” rating on the stock with a price target of Rs 800. Burgeoning operating profitability and strength in operations have been cited as growth drivers for the company in the near term.

Citi: The renowned brokerage has a “Buy” rating on the stock with a price target of Rs 1,144. Monetization of key services offered has been cited as a driver of Paytm share price growth in the future by the firm.

Motilal Oswal: The top domestic brokerage has a “Buy” rating on the stock with a price target of Rs 900.

Yes Securities: The renowned domestic brokerage has a “Neutral” rating on the stock with a price target of Rs 750.

Dolat Capital: The top brokerage has a “Buy” rating on the stock with a price target of Rs 1,250.

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.