The brokerage said the stock trades at 22 times FY23 price to sales, which is expensive.
It said that H1FY22 losses are already at 70 per cent of its FY22 estimates while distribution revenues are at 20 per cent of its FY22 estimates, ET NOW reported.
For the September quarter, Paytm said its gross merchandise value (GMV) stood at Rs 1,95,600 crore, up by 107 per cent YoY and that the growth momentum continued in October, where the GMV at Rs 83,200 crore was up 131 per cent YoY.
Paytm’s consolidated revenue from operations was up 64 per cent year-on-year (YoY) at Rs 1,086.40 crore in the September quarter compared with Rs 663.90 crore in the corresponding quarter last year, thanks to a 52 per cent growth in non-UPI payment volumes (GMV) and more than 3 times growth in financial services and other revenues.
Losses, however, widened to Rs 481.70 crore for the September quarter compared with Rs 376.60 crore posted in the June quarter and Rs 435.50 crore in the same quarter last year.
Paytm said as it continues to invest in expanding user base, its average monthly transacting users (MTU) in September quarter were up 33 per cent YoY to 5.74 crore and the trajectory has continued in October with 6.3 crore MTUs, a growth of 35 per cent Y0Y.
The monthly GMV per transacting user for the quarter rose 55 per cent YoY to Rs 11,369.
JM Financial, which recently initiated coverage on the stock with a ‘sell’ rating, said the quarterly results were on expected lines with respect to revenues while Ebitda loss was a tad higher than expected.
“While we like Paytm’s strategy to develop a digital ecosystem with its payments business as a fulcrum, presence in too many segments without leadership in none (except payments), should keep Paytm chasing MTU growth instead of profitability/monetisation. In this backdrop, we find current valuations expensive especially when EBitda breakeven is expected by FY27 as per our estimates. In addition, a complex group structure, large public float (owned by private equity players) would keep valuation multiples in check,” it said.
This brokerage has retained its target of Rs 1,240 on the stock. The ability to monetise payments, improvement in take rates and faster-than-expected scale-up in financial services are a few upside risks, it said.
