Paytm junks insurance business plan, stock trades flat

Shares of One 97 Communications, the Paytm parent, were trading lower on September 7 following a report that the Noida-based payment player had abandoned plans to enter the insurance business and would focus on payments and credit.

CNBC-TV18 reported that Paytm has decided to withdraw its plans to enter the insurance sector, with no intention to explore other financial service avenues at this point. The company would direct its attention to its core competencies — digital payments and credit disbursement.

Paytm was considering the acquisition of QBE Raheja Insurance and its insurance licence.

Moneycontrol couldn’t verify the development independently.

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Brokerage Views

CLSA has a “buy” rating on Paytm with a target price of Rs 1,050 a share. In a recent report, the brokerage firm said, “Paytm has witnessed healthy growth in business metrics, but fixed costs of the company are rising. The EBITDA estimates have been lifted by 9-12 percent and the company is expected to generate free cash flow over the next few quarters.”

Also Read: Paytm founder Vijay Shekhar Sharma says he’s looking for chances to raise stake

Citi has raised its target on the stock to Rs 1,200 from Rs 1,160. Overall, gains in net payment margins more than offset lower lending distribution take-rates & higher fixed costs’ increase, it said.

Brokerage firm Goldman Sachs said Paytm is firmly on track to be the most profitable India internet company starting FY25 and suggested a target of Rs 1,200.

JPMorgan’s target price is Rs 950. The clearance of regulatory overhangs and free cash flows (FCF) and profit after tax (PAT) breakeven would be the key factors driving the stock, the firm said. “We think Paytm can be the first Indian B2C internet stock to trade on profit rather than revenue multiples,” it said.

BofA Securities suggested a target of Rs 1,020 on the stock.

At 11.25 am, the stock was trading at Rs 892.85 on NSE, down 0.66 percent from the previous close.

Paytm stock has given a return of 43.78 percent over the last six months against the benchmark Nifty50’s 10.28 percent during the same duration.

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