Shares of One97 Communications, parent company of Paytm, dropped over 9% in intraday trade on Friday, snapping four-day gaining streak amid strong volume trade. The fintech stock rose nearly 35% in the last four sessions after some foreign brokerages raised target price for Paytm shares as it achieved an operating profitability milestone during the December quarter. The payment solutions company posted EBITDA before ESOP cost at ₹31 crore in Q3 FY23, significantly ahead of its guided timeline of September 2023.
Paytm shares opened 0.8% lower at ₹706.55 against the previous closing price of ₹712.55 on the BSE. During the session so far, the stock declined as much as 8.2% to hit a low of ₹653.55 amid surge in selling activities. On the NSE, the Paytm share price tumbled 9.3% in intraday trade to ₹640 as compared to Thursday’s closing price of ₹705.95. On the volume front, a combination of 4.05 crore equity shares had changed hands on the NSE and BSE so far, while the market capitalisation stood at ₹42,928 crore.
Paytm shares have risen 49% against its 52-week low of ₹439.60 touched on November 24, 2022. It touched a 52-week high of ₹969 on February 10, 2022. The stock has delivered a negative return of 30% in the last one year, while it dropped 20% in the six-month period. In the last one month, the stock jumped 14.5%, whereas it zoomed 21% in a week.
Earlier this week, Paytm reported a net loss of ₹392 crore for the third quarter ended December 31, 2022, as compared to the loss of ₹779 crore in the same period a year ago. The revenue from operations rose 42% year-on-year (YoY) to ₹2,062 crore, driven by an increase in merchant subscription revenues, growth in loan distribution and momentum in commerce business. During the quarter, the company’s earnings before interest, taxes, depreciation and amortisation (EBITDA) before ESOP improved by ₹452 crore YoY.
Commenting on Q3 results, Paytm Founder and CEO Vijay Shekhar Sharma had said the company achieved its target for operational profit excluding ESOP cost. “I wrote to you on April 6, 2022, and set a target for EBITDA before ESOP cost breakeven by the September 2023 quarter,” he said.
During the December quarter, the company’s gross merchandise value (GMV) for its payments business grew by 38% YoY to ₹3.5 lakh crore. “Our payment processing margin this quarter was within the range of 7-9 basis points (bps) of GMV as indicated in December 2022. This is proforma for Q3 FY 2023 UPI incentive, and despite the inclusion of interchange costs for Paytm Postpaid,” the company said.
Post Q3 results, foreign brokerage houses such as Citi, Goldman Sachs, Bank of America (BofA), CLSA have recommended a “Buy” rating on Paytm shares and raised target price price targets as high as ₹1,150, an upside potential of over 60% from Thursday’s closing price. While Citi, CLSA, and Goldman Sachs have assigned “Buy” rating to the stock, BofA maintained its 'neutral' rating.
On Wednesday, Paytm released its business operating performance for January 2023, which saw consistent growth in its total merchant payments value. The total merchant GMV processed through the platform in January aggregated to ₹1.2 lakh crore ($15 billion), posting a YoY growth of 44%. The company continued to reign the market in offline payments with 6.1 million merchants now paying subscriptions for payment devices, while MTU stood at 89 million, registering a robust growth of 29% YoY.
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