{"id":6284,"date":"2022-01-04T16:53:17","date_gmt":"2022-01-04T11:23:17","guid":{"rendered":"https:\/\/www.tickertape.in\/blog\/?p=6284"},"modified":"2022-01-04T16:53:18","modified_gmt":"2022-01-04T11:23:18","slug":"paytm-could-breakeven-in-fy-2025","status":"publish","type":"post","link":"https:\/\/www.tickertape.in\/blog\/paytm-could-breakeven-in-fy-2025\/","title":{"rendered":"Paytm Could Breakeven in FY 2025: Morgan Stanley and JP Morgan"},"content":{"rendered":"\n<p>Analysts at JP Morgan said, \u201cWe view <a href=\"https:\/\/www.tickertape.in\/stocks\/one-97-communications-PAY?checklist=basic\/?utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Paytm<\/a> as a one-of-a-kind \u2018fintech horizontal\u2019 given its ability to drive monetisation across categories and defray customer acquisition costs (CAC) across a range of products.\u201d<\/p>\n\n\n\n<p><a href=\"https:\/\/www.tickertape.in\/blog\/paytm-payment-bank-down-13-rbi-banned-adding-new-customers\/\">Paytm<\/a>, the <a href=\"https:\/\/www.tickertape.in\/blog\/how-is-india-catching-up-with-digital-payments\/\">digital payments<\/a> startup, has declined 38% since its listing. The stock has underperformed <a href=\"https:\/\/www.tickertape.in\/indices\/nifty-index-.NSEI?utm_source=blog&amp;utm_medium=article\" target=\"_blank\" rel=\"noreferrer noopener\">Nifty<\/a> sharply and is trading at a discount to private and global peers. But JP Morgan has assigned an \u2018overweight\u2019 rating to the stock.<\/p>\n\n\n\n<p>Analysts at JP Morgan said, \u201cWe view Paytm as a one-of-a-kind \u2018fintech horizontal\u2019 given its ability to drive monetisation across categories and defray customer acquisition costs (CAC) across a range of products.\u201d<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_66_1 counter-hierarchy ez-toc-counter ez-toc-custom ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title \" >Table of Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/www.tickertape.in\/blog\/paytm-could-breakeven-in-fy-2025\/#Breakeven-point-%E2%80%93-as-per-JP-Morgan\" title=\"Breakeven point &#8211; as per JP Morgan\">Breakeven point &#8211; as per JP Morgan<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/www.tickertape.in\/blog\/paytm-could-breakeven-in-fy-2025\/#Morgan-Stanleys-view\" title=\"Morgan Stanley\u2019s view\">Morgan Stanley\u2019s view<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/www.tickertape.in\/blog\/paytm-could-breakeven-in-fy-2025\/#Paytm-%E2%80%93-one-of-the-worst-IPO-listings-of-2021\" title=\"Paytm &#8211; one of the worst IPO listings of 2021\">Paytm &#8211; one of the worst IPO listings of 2021<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Breakeven-point-%E2%80%93-as-per-JP-Morgan\"><\/span><strong>Breakeven point &#8211; as per JP Morgan<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The global brokerage firm believes that Paytm can deliver ~60% revenue growth and ~10x expansion in contribution profits over FY 2021-24. This could help the firm achieve cash breakeven and positive free cash from FY 2025 onwards without losing excess cash on the balance sheet.<\/p>\n\n\n\n<p>JP Morgan expects Paytm to sharply beat consensus FY 2023\/24 GMV\/revenue growth expectations. This could be the primary share price catalyst.<\/p>\n\n\n\n<p>The global rating firm believes that the key risk to Paytm is the credit loss in the lending business, although the company does not take credit risks on its books.<\/p>\n\n\n\n<p>Says JP Morgan, \u201cGiven the low ticket size nature of lending and an unseasoned book, a through-cycle credit loss in the portfolio is not yet established. We are less concerned about competitors as most are focused on the non-monetizable UPI business or are vertical-focused fintechs that have a fraction of the revenue of Paytm.&#8221;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Morgan-Stanleys-view\"><\/span><strong>Morgan Stanley\u2019s view<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Morgan Stanley shares a similar sentiment about Paytm. It has assigned an \u2018overweight\u2019 rating to the <a href=\"https:\/\/blog.tickertape.in\/how-is-india-catching-up-with-digital-payments\/?utm_source=blog&amp;utm_medium=article\" rel=\"nofollow noopener\" target=\"_blank\">digital payments<\/a> startup Paytm and sees an attractive risk-to-reward, valuing the firm at $ 17 bn. Analysts at the global firm opine that Paytm\u2019s profitability should improve sharply as financial services scale up. They expect the company to break even at the operating profit level in FY 2025.\u00a0<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Paytm-%E2%80%93-one-of-the-worst-IPO-listings-of-2021\"><\/span><strong>Paytm &#8211; one of the worst IPO listings of 2021<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>One 97 Communications Ltd, Paytm\u2019s parent company, had raised $ 2.5 bn in its <a href=\"https:\/\/www.tickertape.in\/blog\/5-parameters-to-analyse-an-ipo\/?utm_source=blog&amp;utm_medium=article\">IPO<\/a> in 2021. The stock closed 27% lower than its issue price on the listing date, which was one of the worst market debuts by a major technology firm since the dot-com bubble era of the late 1990s.<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Although Paytm has declined 38% since its listing, JP Morgan and Morgan Stanley assign it an \u2018overweight\u2019 rating. They expect it to breakeven by FY 2025.<\/p>\n","protected":false},"author":27,"featured_media":6286,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"inline_featured_image":false,"_lmt_disableupdate":"","_lmt_disable":"","footnotes":""},"categories":[10,1744],"tags":[1146],"acf":[],"modified_by":"Aradhana Gotur","jetpack_featured_media_url":"https:\/\/www.tickertape.in\/blog\/wp-content\/uploads\/2022\/01\/5.png?wsr","_links":{"self":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/6284"}],"collection":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/users\/27"}],"replies":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/comments?post=6284"}],"version-history":[{"count":3,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/6284\/revisions"}],"predecessor-version":[{"id":6288,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/posts\/6284\/revisions\/6288"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media\/6286"}],"wp:attachment":[{"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/media?parent=6284"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/categories?post=6284"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.tickertape.in\/blog\/wp-json\/wp\/v2\/tags?post=6284"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}