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Published: September 30, 2024
Updated: September 30, 2024

Paytm's Resurgence: Analysts Predict Strong Growth and Early Profitability

Stock Price Soars as Business Prospects Improve

Paytm has made a remarkable comeback, with its stock price jumping 103% to ₹731 in the last five months. This resurgence follows a challenging first half of the year marked by regulatory issues. Investors are now optimistic about Paytm’s improved business outlook, with key developments driving growth across its segments.

Analysts Upbeat on Paytm’s Growth Potential

Several brokerages have responded positively to Paytm's progress, adjusting their target prices upwards. Analysts see this as the beginning of a strong growth phase for Paytm, positioning it for early profitability. Regulatory easing and successful strategic initiatives have contributed to renewed investor confidence in the company’s future.

Dolat Capital: Paytm Set for Growth Momentum

Dolat Capital has expressed confidence in Paytm’s trajectory, citing reduced challenges and stabilization across its business lines. The completion of the company’s handle migration and the resolution of regulatory issues surrounding the Payment Aggregator (PA) license have been key drivers. Dolat expects Paytm to hit its adjusted EBITDA breakeven by Q4 FY25, excluding UPI incentives, and sees the company transitioning to positive cash flow. The brokerage raised its target price to ₹920, maintaining a ‘buy’ rating, and anticipates significant revenue growth over the next decade.

Emkay Global: Regulatory Easing to Drive Recovery

Emkay Global Financial Services recently upgraded Paytm’s rating from ‘Reduce’ to ‘Add,’ doubling its target price to ₹750 per share. The brokerage noted that easing regulatory pressures would allow Paytm to onboard more users and merchants, accelerating its recovery. With cost optimization measures in place, Emkay believes the company is on an early path to profitability. It highlighted Paytm's strong market presence, with a merchant base of 41 million, and pointed to merchant lending as a key growth driver.

Mirae Asset: Strong Business Recovery Ahead

Mirae Asset Capital Markets also shares a positive outlook for Paytm, citing its recovery in operating metrics and better-than-industry-average growth prospects. The company’s management aims for a 15-20% EBITDA margin within the next 3-4 years, with break-even expected by Q4 FY25. Mirae also highlighted Paytm’s plans to deploy 1 million new devices by Q3 FY25 and its intention to use cash reserves for strategic mergers and acquisitions.

Ventura Securities: Bright Future for Paytm

Ventura Securities is optimistic about Paytm’s future, praising its robust business model and cutting-edge technology. With UPI dominating digital payments and Paytm's Soundbox and POS devices becoming essential for merchants, the brokerage expects Paytm to grow significantly between FY24 and FY27E. Ventura predicts a compound annual growth rate (CAGR) of 14.1% in revenue, 15.6% in contribution profit, and 54.5% in pre-ESOP EBITDA during this period. By FY27, Ventura forecasts Paytm’s revenue to reach ₹14,531 crore, with EBITDA and net earnings turning profitable.

Paytm on Track for Strong Recovery and Profitability

Analysts agree that Paytm is well-positioned for sustained growth in the digital payments industry. With regulatory headwinds easing and strategic initiatives in place, the company is on an early path to profitability. As Paytm expands its core payments and financial services, it is expected to be a major beneficiary of India’s digital economy, driving its stock higher and securing long-term success.