Debasis Mohapatra
Bengaluru, 13 September 2024
The worst may be over for fintech major, Paytm as the company is witnessing improvement in its various operating metrics.
According to a note by Mirae Asset Capital Markets, Paytm is confident of delivering 30-35% GMV (Gross Merchandise Value) in long-term.
“Despite facing restrictions from the RBI, Paytm has shown resilience and determination in successfully navigating its business model. In the wake of these challenges, the company experienced a noticeable decline in revenues, UPI market share, MTUs, and a reduction in consumer loan disbursals. However, Paytm’s seamless migration of UPI handles to other partner banks positions it to receive approval from NPCI for new customer additions,” the note said.
“With new merchant signups returning to pre-restriction levels, an improvement in daily merchant payment GMV, and stabilization in MTUs (Monthly Transacting Users), it seems that the worst may already be behind. The expected resumption of new customer additions, a pick-up in-credit cycles and a strong addition of devices are expected to boost its revenue growth going ahead. Paytm remains optimistic about delivering a 30-35% growth in GMV in the long term,” the note added.
Early this year, Reserve Bank of India imposed business restrictions on Paytm’s Payment Bank, leading to severe business disruption for the group. However, things are slowly changing for better for the company.
On Thursday, Paytm’s Founder, Vijay Shekhar Sharma said on company’s Annual General Meeting that the company would reapply for a Payment Aggregator (PA) license in due course.
Meanwhile, Mirae Asset said in that report that Paytm’s profitability is likely to improve in the coming years.
“Paytm is confident that its CM will remain in the range of 50-55% in the near-to-medium term, while it is likely to expand to 60% in the next 3-4 years. With focus on creating a leaner organization, expansion of its merchant base, addition of new consumers and reduction in ESOP expenses, Paytm’s profitability is expected to improve going ahead, given increasing cross & up-selling opportunities. Paytm aims to reach an impressive EBITDA margin of 15-20% in the next 3-4 years,” the report said.
The share price of Paytm gained 11.71% this week (Sept 9-13) to settle at Rs 658 on Friday in NSE.
