Paytm shares get another ‘Buy’ call; Citi resumes coverage, finds valuations reasonable Paytm (One 97 Communications) shares have got another bullish call from a global brokerage firm. After JP Morgan resumed coverage of Paytm shares earlier this month, now Citi has restarted its coverage of the fintech major, finding valuations reasonable and advising investors to buy the stock. The target price of Paytm shares has been increased to Rs 915 per share, up from Rs 910 apiece that was pinned by analysts earlier. Paytm stock has been a huge underperformer since listing last year. So far this year, shares of Paytm have tanked more than 53% to now trade at Rs 615 per share. “We are resuming coverage of One 97 Communications (Paytm) following a brief period of internal restriction, and after the company’s 4QFY22 results,” Citi said in a report. They added that Paytm is showing steady improvement in payments monetization and scaling up financial services rapidly (focus on retention & upselling/partnerships). “We expect growth in fixed opex to meaningfully slow over FY23-24E; driving an Adjusted EBITDA breakeven by FY25E. At 6x FY24E EV/GP, valuations are relatively reasonable against peers.” “Overall, improvement in contribution margins (35% in 4Q; up from 21% in 4Q21) have been offset by higher fixed opex (+50% YoY in FY22); resulting in modest improvement in Adj EBITDA,” Citi said. They added that operating leverage should be more visible in FY23E for Paytm. Between the current financial year and March 2026, Citi now expects Paytm’s gross profits to grow at 37% CAGR and contribution margins to expand from 30% in FY22 to 39% in FY26E. Citi analysts said that Paytm stock currently trades at 6x FY24E EV/Gross Profits, a substantial discount to Zomato/Nykaa which trade at 10x/20x FY24E EV/GP. Reinitiating the coverage, the target price has been pinned at Rs 915 apiece, implying a 47% upside from the current market price of Paytm. Among risks to the upside are new the BNPL and Digital Payments regulations, competition in digital lending and sustainable scale-up of financial services, which is critical for profitability.
If the current trend continues for a longer period of time, not only oil mills but oilseeds growers will also not be able to get good rates of their produce, says Samir Shah, president of Gujarat State Edible Oils and Oil Seeds Association (GEOA). Shah who is also past president of SOMA says that due to various international factors rates of edible oils had gone up considerably, especially imported oils earlier this year.
“With a view to curb rising prices of edible oil, the Government of India reduced import duty on edible oils. Considering the fact that India is producing hardly 30 percent of its edible oil requirement, the decision was right at that point of time. Now when international prices of edible oils have gone down by 15 percent to 25 percent and high production period has started in edible oil exporting countries, the government should gradually increase import duty to protect local oil mills and oilseeds growers,” said Shah. GEOA has also made representation before Union Minister for Commerce & Consumer Affairs, Piyush Goyal to increase import duty.
In June import duty on edible oils was ranging from 35 to 55 percent, since then the government gradually reduced import duty and at present it is ranging from zero percent to 15 percent on different edible oils, he said.
Just a month back prices of edible oils were through the roof and the government took appropriate measures by reducing import duty in order to protect consumers, says Atul Chaturvedi, president of Solvent Extractors Association of India (SEA). “Prices of edible oils are coming down globally. Kharif sowing has already started across the country. In the interest of local farmers, it is high time to enhance import duty in a phased manner to encourage local edible oil value chain,” opined Chaturvedi.
On Thursday imported Palm oil prices were at around Rs 2100 per 15 kg as against local Rs 2700 and Rs 2550 of groundnut and cottonseed oils. Prices of other local oils including ricebran, coconut, soyabean and mustard remained as high as Rs 2350, Rs 2520, Rs 2500 and Rs 2580 respectively.
India imports around 13-13.5 million tonnes of edible oils, of which around 8-8.5 million tonnes (around 63 per cent) are palm oil. Though the price of other imported Sunflower oil remained at around Rs 2700 per 15 kg, but import quantity of the oil is much lower than that of palm oil.