One 97 Communications Ltd, popularly known as Paytm, has garnered significant attention as Mirae Asset Capital Markets initiates coverage with a buy rating and sets a target price of ₹1,210. This marks a potential upside of 23.46% from its recent closing price of ₹980. The brokerage firm has backed this rating with promising projections, including achieving profitability (before ESOP expenses) at the net profit level in Q4FY25 and Q4FY26, and an impressive contribution margin (CM) ranging between 53-64% from FY25 to FY30.
Impressive Revenue Growth Trajectory
Mirae Asset forecasts that Paytm will maintain its upward momentum with a CAGR of 22% for payment services revenue over FY24-FY30. Moreover, the brokerage anticipates an overall revenue growth CAGR of 25% during FY25-FY30, driven by enhanced cross-selling and increasing financial services contributions to its revenue mix. This robust growth trajectory underscores Paytm’s ability to sustain market leadership and expand its offerings.
Paytm’s Unique Position in Fintech
Paytm has established itself as a trailblazer in the ever-evolving fintech ecosystem. With its strong network effects, advanced tech platform, and dedicated sales team, the company has become a dominant player in India’s digital payments landscape. Notable highlights of Paytm’s journey include:
- Registered Merchants: An industry-leading base of 4.2 crore registered merchants, with 1.12 crore payment devices deployed.
- GMV Growth: Achieving an impressive 52% CAGR in Gross Merchandise Value (GMV) over FY19-FY24, showcasing its expanding user base and transaction volumes.
Driving Innovation with Products and Ecosystem
Paytm’s strategic focus on product innovation and ecosystem integration has positioned it for long-term growth. With the revival of its digital wallets and Buy Now, Pay Later (BNPL) offerings, the company expects higher GMV growth. Mirae predicts that Paytm will deliver a 20% CAGR in GMV from FY24 to FY30, bolstered by its 27% market share in digital payments in India.
Addressing Challenges and Regulatory Hurdles
Despite recent regulatory restrictions that led to a temporary dip in monthly transactions (from 10 crore in Q3FY24 to 7.1 crore in Q2FY25), Paytm’s resilient strategies ensured stability in its merchant base. Strategic retention measures have helped the company maintain its merchant network, reinforcing its platform’s reliability and market presence.
Bright Future Ahead for Paytm
Mirae Asset’s analysis underscores Paytm’s significant growth potential as a result of its:
- Robust Business Model: Paytm’s pivot towards a pure payments model has gained traction, with a firm focus on creative products and ecosystem synergies.
- Strong Market Presence: Its leadership in digital payments, coupled with its vast merchant network and innovative solutions, places Paytm at the forefront of India’s fintech growth story.
- Cross-Selling Opportunities: By leveraging its ecosystem, Paytm has been successful in driving financial services contributions, enhancing overall profitability.
Conclusion
Paytm’s trajectory in India’s fintech domain remains remarkable. With its innovative solutions, resilient strategies, and a focused roadmap, the company is well-poised to achieve consistent growth. Mirae Asset’s positive outlook, supported by projected profitability and revenue expansion, further reinforces Paytm’s potential as a formidable player in the industry. Investors eyeing the fintech space can find Paytm an appealing option as it continues to redefine digital payments and financial services in India.