Paytm Share Price: Shares of One97 Communications, which operates under the Paytm brand, jumped over 5 per cent in morning trade on Monday after the company’s consolidated loss narrowed to Rs 167.5 crore in the fourth quarter ended March 31, 2023.

Shares of Paytm rose 5.25 per cent to hit a high of Rs 725.60 on BSE. With this, the stock has risen 13 per cent in six sessions to Monday.

The latest bout of buying on the counter was seen as a host of foreign brokerages stayed optimistic on the stock post the Vijay Shekhar Sharma-led new age company’s March quarter results.

The payment giant’s consolidated loss narrowed to Rs 167.5 crore in the fourth quarter ended March, compared to a loss of Rs 762.5 crore in the year-ago period. The consolidated revenue from operations jumped 51.5 per cent to Rs 2,334.5 crore in Q4FY23 from Rs 1,540.9 crore in Q4FY22. In the past one month, Paytm shares have jumped 11.5 per cent and 27 per cent in the last one year.

Should you buy, sell or hold Paytm stock?

After reporting an unchanged credit metrics for five consecutive quarters, Paytm has for the first time reported an improvement in ECL (expected credit losses) in its BNPL (buy now pay later) portfolio and reduction in bounce rates across its BNPL and personal loan portfolios, Goldman Sachs said in a note.

Sustainability of Paytm’s credit metrics has been a key investor concern, and the results should help build confidence around the scalability of the company’s lending book, it said while suggesting a target of Rs 1,150 on the stock.

“We believe these results should largely put to rest debates around Paytm’s business model traction and profitability, and we see resolution of outstanding regulatory issues (ban on PPBL and online merchant onboarding) as the next set of catalysts for the stock,” Goldman Sachs said.

Citi said Paytm has several profitability tailwinds. It said digital payments continue to see robust growth, adding that there is significant headroom for increase in penetration of lending products into existing consumers.

“We expect adjusted Ebitda/Ebit margins to expand from 5 per cent/minus 3 per cent in 4QFY23 to 13 per cent/9 per cent by FY26E on top line growth at 20 per cent CAGR over FY23-26E. The CMP implies 22 times FY26E EV/adjusted Ebitda,” it said while upping its price target on the stock to Rs 1,144 from Rs 1,103

Paytm reported 51 per cent jump in revenue from operations at Rs 2,334 crore in Q4FY23 on an annual basis. The company brought down its net loss in the March quarter to Rs 168 crore from Rs 761 crore a year ago, and Rs 392 crore in Q3FY23. The company said its revenue growth was led by an increase in gross merchandise value (GMV), higher merchant subscription revenues, and growth of loans distributed through the company’s platform.

“We estimate Paytm to achieve EBITDA break-even by FY25 and value Paytm based on 18x FY28E EV/EBITDA and discount the same to FY25E taking a discount rate of ~15 per cent. We thus value the stock at Rs 900, which implies 4.5x FY25E P/Sales,” said analysts at Motilal Oswal.

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