Monday, May 20, 2024

Dolat Capital maintains ‘BUY’ rating for Paytm with a target price of ₹1400

Paytm, India’s leading digital payments and financial services company, continues to register robust growth in its diverse business. On Tuesday, July 19, the analysis and research firm Dolat Capital maintained its BUY rating for Paytm and gave a Target Price of ₹1,400.

The research firm said that Paytm has rapidly advanced from a basic recharge platform to a digital payments giant. Adoption and scale up of multiple use cases such as payments, lending products, investment products, insurance, commerce have created a potentially large ’Life-Time-Value from Customer’ metric, with relatively lower CAC per category.

“Both the Soundbox and Postpaid segments are growing at a fast pace, and have cumulatively added ₹7 billion on annualized basis. Paytm’s biggest advantage lies in
having no real-world marginal costs attached for most business use cases – a rare
phenomenon for a platform,” added Dolat Capital.

It further said: “We believe Paytm’s cost management will lead to accrual of strong incentive based revenue stream on its Personal/Merchant loan portfolio in FY23, and can add ₹0.5 billion directly to operating profits. In addition, various initiatives such as introduction of platform fees on utility payments, scale led improvement in payment processing charges and overall operating leverage, will ensure a timely path to profitability by H1FY24, and eventual creation of large profit pools.”

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