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Citi sees 83% rally in Paytm share price on growth in loan disbursals, device deployment, maintains 'buy' call

Posted On: 2023-03-15 10:57:35 (Time Zone: IST)

Global brokerage firm Citi has maintained its 'buy' call on Paytm, India's leading digital payments and financial services company and the pioneer of QR and mobile payments. Citi highlighted that Paytm's February 2023 operating metrics show sustained momentum in loan disbursals and device deployment. It has maintained its target price on Paytm at Rs 1,061 apiece, a potential rally of 83 per cent from current levels. The brokerage firm cited that based on RBI's payment statistics (Jan '23), it estimated the share of UPI in Merchant Digital Payments at 59% in Jan'23 (vs. 49% in Jan '22).

"Among other instruments, credit cards continue to see healthy growth (40%+ YoY across online and offline), although market share continues to shift towards UPI overall," it said in the report.

Paytm's market shares in total UPI payments and digital merchant payments remained largely steady. Citi noted that in overall UPI, including Peer-to-Peer (P2P) payments, Paytm's market share stood at 11% in Feb'23 whereas Paytm's market share in overall digital payments to merchants (including other instruments like credit cards etc.) stood at 24%.

Paytm continues to strengthen its leadership in offline payments, with 6.4 million merchants now paying subscriptions for payment devices, an increase of 0.3 million in the month of February 2023. The fintech pioneer disbursed 7.9 million loans in the January and February of this year. After pioneering QR code and Soundbox in India, Paytm brought UPI LITE which enables lightning-fast payments that never fail.

In its recently announced October-December quarter (Q3FY23) results, Paytm achieved the milestone of operating profitability, nine months ahead of its September 2023 guidance. The company's earnings before interest, taxes, depreciation, and amortization (EBITDA) before employee stock ownership plan (ESOP) cost stood at ?31 crore with EBITDA before ESOP margin at 2% of revenues as compared to (27%) a year ago. The fintech pioneer's revenue from operations increased 42% year-on-year to ?2,062 crore, driven by growth in its core payments business and sustained growth momentum in the credit business and commerce business.

Shares of One 97 Communications Limited was last trading in BSE at Rs. 579.25 as compared to the previous close of Rs. 580.90. The total number of shares traded during the day was 321572 in over 12053 trades.

The stock hit an intraday high of Rs. 597.50 and intraday low of 576.10. The net turnover during the day was Rs. 188490040.00.

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