Paytm shares zoom on lower net loss for Dec quarter

Paytm shares tank after block deal with Alibaba affiliate

Shares of One97 Communications, which operates digital payments app Paytm, shot up on February 6 after the company managed to lower its consolidated net loss during the quarter ended December 2022.

The digital payments operator's revenue surged 41 percent on-year in the October-December period to Rs 2,062 crore, aided by a rise in merchant subscriptions to payment devices and loan disbursals.

Supported by the strong growth in its topline, the company's net loss also narrowed to Rs 392 crore in the December quarter, as against Rs 778 crore a year ago.

Adding to that, the company's EBITDA before deducting employee stock option (ESOP) cost, a proxy metric used by new-age companies to define operating profitability, was at Rs 31 crore for the reporting quarter.

Commenting on the same, Paytm founder and CEO Vijay Shekhar Sharma said that the company managed to achieve operating profitability three quarters ahead of its guidance. The company had earlier given a guidance to achieve operating profitability by Q2 of 2023-24.

Consequently, shares of Paytm surged in early deals on February 6 and. at 9.43am, traded 4.42 percent higher at Rs 548.20 on the National Stock Exchange. The stock had hit an intraday high of Rs 563.95.

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Brokerage view

Buoyed by the strong quarterly performance of Paytm, brokerage firm Goldman Sachs gave a 'buy' rating to the stock with a target price of Rs 1,150, which implies an over twofold upside potential from Friday's closing price.

The brokerage also expects profitability for the company to sustain on the back of strong traction in disbursals, operating leverage and UPI reimbursements. Goldman Sachs also expects adjusted margin for Paytm to expand to 6 percent in the next quarter.