Paytm may see profitability in March, two quarters ahead of expectation; Goldman Sachs raises target price

Paytm is expected to be adjusted EBITDA positive in March 2023, two quarters ahead of the estimates and the company's guidance of September 2023.

It is learnt that global investment firm Goldman Sachs expects October-December 2022 to be another strong quarter for Paytm, with revenue growth of 45 per cent on a yearly basis, adding that its margins print in the quarter would further increase the markets' confidence around the company's ability to be profitable in 2023.

Notably, the Paytm Super App continued to see growing consumer engagement with the average Monthly Transacting User for the quarter that ended December 2022 at 85 million, registering a growth of 32 per cent on a yearly basis.

"Paytm's MTU (monthly transacting users), loan disbursals and devices deployed continue to surprise us positively, and we have further raised our estimates for these metrics...," Goldman Sachs said.

Thus, it reiterated 'Buy' rating with revised share target price of Rs 1,120 over a period of 12-month horizon. It is currently trading at Rs 541 per share.

The global investment firm believes the current share price continues to offer a compelling entry point into what it termed Paytm as India's largest and one of the fastest-growing fintech platforms.

Meanwhile, the total merchant Gross Merchandise Value processed through the Paytm platform for the quarter that ended December 2022 aggregated to Rs 3.46 lakh crore (USD 42 billion), marking a year-on-year growth of 38 per cent.

The number of loans grew 117 per cent yearly to 3.7 million for the month of December, and 137 per cent to 10.5 million cumulative loans for the three months ended December 2022.

As a result, total disbursements for the three months ended December 2022 was Rs 9,958 cr, a growth of 357 per cent on the year.

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