ICICI Securities bullish on Paytm; shares may hit Rs 1,055

While maintaining its bullish outlook on One 97 Communications Paytm brokerage ICICI Securities, it thinks that the company shares may hit the Rs. 1,055 mark, an upward trend of more than 49 per cent against the current market price of 706.

The brokerage's report on May 26 said the positive cycle of customer growth, retention and cross-sell play out for the company is encouraging. The growth is fueled by growth in use cases and the growing customer onboarding and increase in customer-onboarding.

The new technologically advanced platform has 10 x more transactions compared to current volume with a focus on artificial general intelligence AGI could be a strong lever ahead, ICICI Securities said.

ICICI Securities said enhancing monetisation of the UPI platform and introducing credit card in GMV could lead to positive surprises ahead, with around 40 per cent CAGR in GMV between FY 23 - FY 25 E 82 per cent CAGR between FY 21 - FY 23 and expect gross payment take rates to drop from 0.36 percent in FY 23 to 0.33 percent in FY 25 E and net payment rates to drop from 0.14 percent to 0.11 percent during the same period.

The fintech platform has reported 51 percent YoY growth in revenue from operations at Rs. 23,000 crore in Q4th quarter of 2016 as compared to Q4th quarter of 2015 as compared to Q4th quarter of 2016 of the same period last year. Paytm's net loss in March was Rs 168 crore, down from Rs 761 crore a year ago and Rs 392 crore in Q3 FY 23.

Brokerage YES securities set a goal price of Rs 750 for Paytm post-Q 4 results. On May 7th, Citi Research also gave a buy rating to Paytm with a target price of 1,103.

Paytm has several growth profitability tailwinds. Citi Research said that digital payments continue to grow robustly and there is significant headroom for an increase in penetration of lending products into existing consumers.