Paytm’s Bright Future: Goldman Sachs, Jefferies, and More Predict Growth
Brokerage firms Goldman Sachs, Jefferies, Bernstein, and Dolat Capital are optimistic about the growth and recovery of Paytm, a leading payments and financial services company, after its Q1 FY25 earnings report.
Positive Outlook from Brokerage Firms
Dolat Capital highlighted Paytm’s strategy for business expansion and cost efficiency, positioning the company for a strong recovery. Bernstein noted that Paytm’s daily GMV for continued business remained stable, with merchant GMV trends returning to pre-disruption levels and consumer GMV improving.
Goldman Sachs expressed optimism about Paytm’s growth, citing stabilization in Monthly Transacting Users (MTUs), increased merchant lending, and strong cost control. They raised the target price on Paytm’s shares to Rs 420 from Rs 400.
Jefferies expects positive cash flows by FY26, driven by top-line recovery and cost control, with a gradual decline in cash burn. They anticipate 15-20% EBITDA margins by FY27-28.
Future Prospects
BOFA Securities noted that insurance and wealth contribute 3-4% to Paytm’s revenue, with potential for future growth. They expect Paytm to achieve EBITDA breakeven by FY28. Morgan Stanley cautioned that pending regulatory approvals could impact the company’s new strategy.
Q1 FY25 Performance
Paytm reported a platform GMV for continued business of Rs 4.3 lakh crore and a total merchant subscriber base of 1.09 crore by June end. The monthly transacting user base stabilized at 7.8 crore. Despite disruptions, there’s a positive outlook with expectations of increasing subscription revenues per device.
In Q1, Paytm’s operating revenue was Rs 1,502 crore, with financial services contributing Rs 280 crore and marketing services Rs 321 crore. The company achieved a contribution profit of Rs 755 crore with a 50% margin.
Dolat Capital believes Paytm has the potential for significant revenue growth and profitability starting FY26.
Doubts Revealed
Paytm -: Paytm is a popular digital payment and financial services company in India. People use it to pay bills, transfer money, and shop online.
Goldman Sachs -: Goldman Sachs is a big company that helps people and businesses manage their money. They give advice on investments and help companies grow.
Jefferies -: Jefferies is another company that helps people and businesses with their money. They give advice on buying and selling stocks and other investments.
Bernstein -: Bernstein is a company that gives advice on investments. They help people decide where to put their money to make it grow.
Dolat Capital -: Dolat Capital is a company in India that helps people and businesses with investments. They give advice on stocks and other financial matters.
Q1 FY25 -: Q1 FY25 means the first quarter of the financial year 2025. A financial year is a 12-month period that companies use for accounting and reporting their earnings.
Operating revenue -: Operating revenue is the money a company makes from its main business activities, like selling products or services.
Contribution profit -: Contribution profit is the money left after subtracting the costs of making and selling products from the revenue. It shows how much money the company is making from its core activities.
Share price target -: Share price target is the price that experts think a company’s stock should reach in the future. It helps investors decide if they should buy or sell the stock.
Positive cash flows -: Positive cash flows mean that a company is making more money than it is spending. This is a good sign because it shows the company is financially healthy.
