Paytm share price, Morgan Stanley expects share price to rise by 40.55%

Paytm share price: Morgan Stanley, which is an international investment company, has given a target of ₹ 1875 for Paytm (one 97 communication), while the price of one share of Paytm is currently running at Rs 1334.

As per Morgan Stanley’s target, returns of 40.55% can be found in the short term, and there are many chances of this happening because if you track the Paytm stock then you will know that the issue price of Paytm was ₹ 2150. (at the time of IPO).

But this stock was listed at a discount of 10% at Rs 1929 and even after that its price kept falling and it made a low of Rs 1271.

And still, its price is near its low which is Rs 1334, so maybe the price of Paytm will increase from here but the problem is that its fundamentals are very bad and this company is also running in loss.

Financial Valuation of Paytm

Paytm Valuation	FY19	FY20	FY21
Total Revenue (₹ in crores)	3579.70	3540.70	3186.80
Total Assets (₹ in crores)	8766.80	10303.10	9151.30
Profit After Tax (₹ in crores)	-4230.9	-2942.4	-1701

Paytm Business Segment

Paytm Business Model: Paytm is India’s most valuable payment brand, it is not just a company, it is a complete digital ecosystem for consumers and merchants. According to March 2021, Paytm has 333 million+ (more than 33 crores) clients.

There are over 21 million registered merchants, 65 million+ Paytm payment bank accounts, total deposits of 58 billion, and total investments in 69 billion wealth products.

This company provides payment service, financial service, e-commerce, and cloud service. Most of you must have used Paytm and you must know that almost all online services are available in Paytm.

In which you can avail many services like online payment, ticket booking, games, and Paytm first subscription, online shopping, banking, wealth management, insurance, investment in stocks and mutual funds, loan, fastag, payment gateway, etc.

This company gets a lot of benefits of network effect, today everyone uses Paytm for payment and shopping, so merchants also advertise in Paytm, use Paytm for online payment and product sales and such Paytm Business grows.

And now this company is also providing Soundbox to its merchant, in which as soon as you make the payment, the speaker tells the amount by speaking so that both the merchant and the client find it better and easier to use Paytm.

Revenue of Paytm – Paytm share price

Commerce and Cloud services: 25% of the revenue of Paytm comes from commerce and cloud services, from Paytm you can book tickets for travel, movies, events, and in this Paytm charges commission.

Apart from this, you can also buy products from Paytm, in which Paytm charges some fees. Also, if merchants also advertise in Paytm, then Paytm earns from that too.

Financial Services: The remaining 5% of Paytm’s revenue comes from financial services, which include Fast tag, Digital Banking, Loans, Stocks, Mutual Funds, and Insurance Services, in which Paytm charges brokerage, collection fees, etc.

Payment Services: 70% of the revenue of Paytm comes from payment services, for which Paytm’s slogan “Paytm Karo” is famous.

In this segment, the company provides services like Payment Gateway Service, Paytm Wallet, SoundBox, QR Code, and Smart POS (Swipe Machine), etc.

Paytm is India’s largest payment platform with a GMV of 4033 billion rupees. Its market share is 13% in UPI payments and more than 50% market share in the p2m segment, the company is the market leader in this segment.

Debt to equity	0.51
2-year sales CAGR	-5.65%
Current ratio	2.71
Earning per share	-28

But you know that Paytm does not charge any fees from the client, so how does Paytm earn?

So basically the revenue model of Paytm is that Paytm charges some processing fee from the merchant and the device which is a swipe machine also charges their rental from which Paytm earns.

For example, Paytm has more than 2 crore merchants, so even if it charges ₹ 100, then revenue of 200 crores can be generated easily.

So in some way Paytm generates revenue.

Fundamentals of Paytm

The market capitalization of the company is Rs.86,515 crore, return on equity is -19.4%, return on capital employed is -17.8%. Its return on equity and return on capital employed is negative.

Debt: This company is almost debt-free as it has only a debt of Rs 636 crore and its debt to equity ratio is 0.10.

Profit: The company is currently running in loss and has incurred a loss of -1560 crores in the last financial year, apart from this its free cash flow is also in -2175 negative, and earning per share is also in negative -258 rupees.

And this is because this company is incurring a loss, so if this company has a profit, then whatever is in its negative, everything will come in positive but here the promoters’ holding is also 0% but because the company is large.

So the holding of the promoters does not matter much. In L&T which is a very good company, the promoters’ holding is also 0%.

Financial trend

The revenue of the company is maintained but in 2019 it had a loss of 4180 crores, in 2020 the loss was reduced to 2840 crores and in 2021 this loss is further reduced to 1700 crores.

This company is also running at loss, so there is more risk in it but it is not that the company will always be at loss, it may be that the company will become profitable in the coming years and for this Paytm is also trying.

Paytm has reduced its promotional expenses by 60% in the FY21 and Paytm has also started services like postpaid, wealth management, and stockbroking from where the company can be profitable.

Here let us clear to you that Paytm is not the only company that is in loss, Tata Motors is running in loss of 130 crores in FY21, Adani Power is running in loss of 810 crores in FY21 and Zomato is also running in loss.

And because the present price of Paytm is much below its issue price and now Paytm is trading near its lowest price.

This article is only for education purpose and the author has his own views and research, so if you invest in these stocks then do it at your own risk and do the research yourself before investing.

FAQ: Paytm share price

What is the business model of Paytm?

Paytm is India’s most valuable payment brand, it is not just a company, it is a complete digital ecosystem for consumers and merchants. According to March 2021, Paytm has 333 million+ (more than 33 crores) clients. There are over 21 million registered merchants, 65 million+ Paytm payment bank accounts, total deposits of 58 billion, and total investments in 69 billion wealth products.

How is Paytm Financial?

The revenue of the company is maintained but in 2019 it had a loss of 4180 crores, in 2020 the loss was reduced to 2840 crores and in 2021 this loss is further reduced to 1700 crores.

What are the revenue sources of Paytm?

Commerce and Cloud services: 25% of the revenue of Paytm comes from commerce and cloud services, from Paytm you can book tickets for travel, movies, events, and in this Paytm charges commission.
Financial Services: The remaining 5% of Paytm’s revenue comes from financial services, which include Fast tag, Digital Banking, Loans, Stocks, Mutual Funds, and Insurance Services, in which Paytm charges brokerage, collection fees, etc.
Payment Services: 70% of the revenue of Paytm comes from payment services.

What is the debt and profit of Paytm?

Debt: This company is almost debt-free as it has only a debt of Rs 636 crore and its debt to equity ratio is 0.10.
Profit: The company is currently running in loss and has incurred a loss of -1560 crores in the last financial year, apart from this its free cash flow is also in -2175 negative, and earning per share is also in negative -258 rupees.