Vijay Shekhar Sharma Addresses Shareholders Amidst Challenges

Paytm founder Vijay Shekhar Sharma conveyed a positive outlook to shareholders in a post-earnings call, stating that the company has put its worst days behind it. 

His comments follow One97 Communications, Paytm’s parent company, reporting a drop in quarterly revenue and an increase in losses. Sharma emphasized that Paytm has learned valuable lessons and is becoming more resilient and committed to full regulatory compliance.

Vijay Shekhar Sharma talks about Quarterly Financial Performance:

Paytm reported a decrease in revenue, falling to ₹2,399 crore in Q4 from ₹2,465 crore the previous year. Additionally, the company’s losses widened to ₹551 crore from ₹168 crore a year earlier. 

These results come from the Reserve Bank of India’s (RBI) directive for Paytm Payments Bank Ltd to halt several banking activities due to ongoing non-compliance and supervisory concerns.

Motilal Oswal Financial Services:

• Rating: Neutral
• Target Price: ₹400
• Analysis: Motilal Oswal noted that Paytm underwent significant strategic changes due to a severe course correction. 
• The brokerage cut its earnings estimates and projected that Paytm will achieve EBITDA breakeven by FY26. The valuation is based on 15 times FY28E EBITDA, discounted to FY26E at a 15% discount rate, implying a 2.3 times FY26E P/Sales valuation.

Macquarie:

• Rating: Underperform
• Target Price: ₹275
• Analysis: Macquarie maintained an ‘underperform’ rating, suggesting that the full impact of RBI regulations will become evident in Q1FY25. The firm highlighted the need for strong support from Paytm’s lending ecosystem.

JM Financial:

• Rating: Sell
• Target Price: ₹300
• Analysis: JM Financial issued a ‘sell’ rating, expressing concerns about the closure of small-ticket postpaid businesses and the shift towards high-ticket lending. 
• While recognizing Paytm’s efforts to find alternatives for PPBL, the firm remains cautious about new customer onboarding and the revival of high-margin products contingent on regulatory approvals and seamless integration.

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