Paytm was founded by Vijay Shekhar Sharma in 2010 and has grown to become one of the most valuable startups in India. In this blog post, I will provide you with a detailed analysis of Paytm’s business, financials, growth prospects, and valuation, based on both fundamental and technical analysis. I will also give you Paytm Share Price Target 2023, 2024, 2025, 2027, 2030, and Long Term using both methods.
Please note that this is not a recommendation to buy or sell Paytm shares, but only an informative and educational article based on publicly available data and my own calculations.
Paytm is India’s leading digital payments and financial services platform, offering a range of products and services such as mobile wallets, UPI, QR code payments, merchant acquisition, payment gateways, e-commerce, cloud services, lending, wealth management, insurance, and banking.
Paytm has a customer base of over 337 million and a merchant base of over 22 million as of March 31, 2023. Paytm’s vision is to become a full-stack digital financial services provider that can cater to the needs of consumers and merchants across India.
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Paytm Share Price Target 2023, 2024, 2025, 2027, 2030
|Year||Minimum Paytm Share Price Target||Maximum Paytm Share Price Target||Average Paytm Share Price Target|
The Paytm Share Price Target 2023 is Rs 1013, for the year 2024 it is 1260, for the year 2025 it is 1580 and for the year 2030 it is 4830.
Fundamental Analysis of Paytm
Fundamental analysis is a method of evaluating the intrinsic value of a company based on its financial performance, growth potential, competitive advantage, and future prospects.
Fundamental analysis involves looking at various financial ratios, such as earnings per share (EPS), price-to-earnings ratio (PE), return on equity (ROE), debt-to-equity ratio (D/E), and free cash flow (FCF), among others.
Fundamental analysis also considers the macroeconomic and industry trends that affect the company’s business.
We will use key financial parameters to derive the Paytm Share Price Target.
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Paytm’s Financial Performance
Paytm has shown growth in sales, especially from 2021 to 2023. However, the company has been incurring losses consistently over the past five years.
While there has been an improvement in some financial metrics, like the OPM%, the company still faces challenges in turning profitable.
The consistent rise in depreciation also indicates significant investments in assets. The absence of dividends underscores the company’s strategy, possibly focusing on growth and expansion rather than returning profits to shareholders at this stage.
Here is a quick summary of Paytm’s financial performance in the last 5 years:
|Financial||Mar 2019||Mar 2020||Mar 2021||Mar 2022||Mar 2023|
|Profit before tax||-3,960||-2,833||-1,560||-2,325||-1,856|
|EPS in Rs||-688.2||-468.78||-257.93||-35.85||-29.28|
|Dividend Payout %||0%||0%||0%||0%||0%|
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Paytm’s Growth Potential
Despite its losses, Paytm has a huge growth potential in the Indian digital payments and financial services market.
According to a report by RedSeer Consulting, the total payment transactions value in India is expected to grow from $2.9 trillion in FY20 to $8.4 trillion in FY25, at a CAGR of 24%.
The digital payments share in this market is expected to grow from 34% in FY20 to 52% in FY25. Within the digital payments segment, UPI is expected to grow at a CAGR of 40%, while mobile wallets are expected to grow at a CAGR of 15%.
Paytm is well-positioned to capture this growth opportunity with its diversified product portfolio and strong brand recognition. Paytm is the market leader in mobile wallets with over 40% share and also has a significant presence in UPI with over 15% share.
Paytm also offers other payment solutions such as QR code payments, merchant acquiring, payment gateway, and bank transfers.
In addition to payments, Paytm also has a strong growth potential in the financial services segment. According to another report by RedSeer Consulting, the total addressable market for digital financial services in India is expected to grow from $65 billion in FY20 to $140 billion in FY25, at a CAGR of 17%.
The digital financial services segment includes lending, wealth management, insurance, and banking. Paytm has entered into these segments through various partnerships and acquisitions and has launched several products and services such as Paytm Postpaid, Paytm Money, Paytm Insurance, and Paytm Payments Bank.
Paytm has a large customer base and merchant network that can be leveraged to cross-sell and upsell these financial services. Paytm also has access to rich data and insights that can be used to offer customized and personalized solutions to its users.
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Paytm’s Competitive Advantage
Paytm’s competitive advantage lies in its strong brand equity, diversified product portfolio, large customer base, wide merchant network, innovative technology, and strategic partnerships.
Paytm is one of the most trusted and recognized brands in India, with a high recall value and loyalty among its users. Paytm has also diversified its product portfolio to offer a range of payment and financial services that cater to the needs of consumers and merchants across India.
Paytm has a large customer base of over 337 million and a merchant base of over 22 million, which gives it a strong network effect and economies of scale. Paytm also has a robust technology platform that enables fast, secure, and convenient transactions for its users.
Paytm also has strategic partnerships with various banks, financial institutions, e-commerce platforms, telecom operators, and other entities that enhance its reach and value proposition.
Paytm’s Future Prospects
Paytm’s future prospects look bright as it continues to innovate and expand its product portfolio, customer base, merchant network, and revenue streams. Paytm is planning to launch several new products and services in the near future, such as Paytm Credit Card, Paytm Mutual Funds, Paytm IPO Platform, Paytm NUE (New Umbrella Entity), and Paytm Soundbox 2.0.
Paytm is also planning to increase its customer base to 500 million and its merchant base to 25 million by FY25.
Paytm is also planning to increase its revenue from financial services to 50% of its total revenue by FY25. Paytm is also planning to reduce its losses and achieve profitability in the next few years.
Paytm Stock’s Valuation
Paytm’s valuation is based on the discounted cash flow (DCF) method, which estimates the present value of the future cash flows of the company.
The DCF method involves projecting the free cash flow (FCF) of the company for the next 10 years, applying a terminal growth rate to estimate the terminal value of the company at the end of the 10th year, discounting the FCFs and the terminal value by an appropriate discount rate (weighted average cost of capital or WACC), and dividing the result by the number of shares outstanding to get the fair value per share.
The assumptions used for the DCF valuation are as follows:
- Revenue growth rate: Based on the historical CAGR of 36% from FY17 to FY21, and the expected growth potential in the digital payments and financial services market in India, we assume a revenue growth rate of 30% for FY22-FY26, 25% for FY27-FY31, and 20% for FY32 onwards.
- EBITDA margin: Based on the historical EBITDA margin of -40% to -177% from FY17 to FY21, and the expected improvement in operating efficiency and cost optimization by Paytm, we assume an EBITDA margin of -30% for FY22-FY23, -20% for FY24-FY25, -10% for FY26-FY27, 0% for FY28-FY29, 10% for FY30-FY31, and 15% for FY32 onwards.
- Tax rate: Based on the statutory tax rate of 25.17% in India, we assume a tax rate of 25% for all years.
- Capital expenditure: Based on the historical capital expenditure of Rs. 200-300 crore per year from FY17 to FY21, we assume a capital expenditure of Rs. 300 crore per year for all years.
- Working capital: Based on the historical working capital as a percentage of revenue of -5% to -15% from FY17 to FY21, we assume a working capital as a percentage of revenue of -10% for all years.
- Terminal growth rate: Based on the long-term GDP growth rate of India of around 6-7%, we assume a terminal growth rate of 6% for all years.
- Discount rate (WACC): Based on the risk-free rate of 6%, the market risk premium of 7%, the beta of 1.3 (based on similar companies), the cost of equity of 15.1%, the cost of debt of 8%, the debt-to-equity ratio of 0.5 (based on similar companies), and the tax shield of 25%, we calculate the WACC as 11.3%
Using these assumptions, we project the FCFs of Paytm for the next 10 years and estimate the terminal value of Paytm at the end of the 10th year. We then discount these values by the WACC of 11.3% and sum them up to get the enterprise value (EV) of Paytm.
We then subtract the net debt (debt minus cash) of Paytm as of March 31, 2021, which is Rs. -114 crore, to get the equity value of Paytm. We then divide this by the number of shares outstanding as of March 31, 2021, which is 60.5 crore, to get the fair value per share of Paytm.
The table below shows the DCF valuation of Paytm based on fundamental analysis:
|Fiscal Year||Revenue (in Rs. crore)||EBITDA (in Rs. crore)||EBIT (in Rs. crore)||Tax (in Rs. crore)||NOPAT (in Rs. crore)||FCF (in Rs. crore)||PV of FCF (in Rs. crore)|
The terminal value of Paytm at the end of FY31 is calculated as follows:
Terminal Value = FCF in FY32 / (WACC – Terminal Growth Rate)
= (2732 * (1 + 0.06)) / (0.113 – 0.06)
Terminal Value of Paytm= Rs. 1,02,000 crore
The PV of the terminal value is calculated as follows:
PV of Terminal Value = Terminal Value / (1 + WACC)^10
= Rs.1,02,000 crore / (1 + 0.113)^10
= Rs.35,000 crore
The EV of Paytm is calculated as follows:
EV = Sum of PV of FCFs + PV of Terminal Value
= Rs.-5627 crore + Rs.35,000 crore
Enterprise Value of Paytm = Rs.29,373 crore
The equity value of Paytm is calculated as follows:
Equity Value = EV – Net Debt
= Rs.29,373 crore + Rs.-114 crore
Equity Value of Paytm = Rs.29,487 crore
The fair value per share of Paytm is calculated as follows:
Fair Value per Paytm Share = Equity Value / Number of Shares Outstanding
= Rs.29,487 crore /60.5 crore
Fair Value per Paytm Share = Rs.487 per share
Based on the fundamental analysis, the fair value per share of Paytm is Rs.487, which is lower than the current market price of Rs.800 per share as of August 5, 2021. This implies that Paytm is overvalued by the market based on its fundamentals.
The table below shows the Paytm Share Price Target for the next 10 years based on the fundamental analysis:
|Year||Paytm Share Price Target (in Rs.)|
Technical Analysis of Paytm Stock
Technical analysis is a method of evaluating the price movements and trends of a company based on its historical trading data, such as price, volume, momentum, and indicators.
Technical analysis involves looking at various charts, patterns, and signals that indicate the possible future direction and strength of the price.
Technical analysis also considers the psychological and behavioral aspects of the market participants that affect the demand and supply of the company’s shares.
Paytm’s Price Movements and Trends
Paytm share price movements and trends for the last six months (January-July 2023) are summarized in the chart below:
Source: Trading View
As we can see from the chart, Paytm share price has been in a downtrend since its listing in November 2021, with some periods of consolidation and recovery.
Paytm share price has decreased from Rs.800 in November 2021 to Rs.600 in July 2023, which is a decline of 25% in eight months.
Paytm’s price has also been below its 200-day moving average (MA), which is a long-term trend indicator, for most of the time, which indicates a bearish sentiment.
Paytm share price has also been below its 50-day MA, which is a short-term trend indicator, most of the time, which indicates a negative momentum.
Paytm’s Share Price Patterns and Signals
Paytm share price patterns and signals for the last six months (January-July 2023) are summarized in the chart below:
As we can see from the chart, Paytm’s price has formed several patterns and signals that indicate the possible future direction and strength of the price. Some of these patterns and signals are as follows:
- Descending Triangle: Paytm’s price formed a descending triangle pattern from January 2023 to April 2023, which is a bearish continuation pattern that indicates a consolidation in a downtrend followed by a breakdown of new lows. The descending triangle is formed by a horizontal support line and a descending resistance line that converges to form a triangle. The breakdown occurs when the price falls below the support line. The target for this pattern is calculated by subtracting the height of the triangle from the breakdown point. In this case, the height of the triangle is Rs.100 (Rs.700 – Rs.600), and the breakdown point is Rs.600, so the target is Rs.500 (Rs.600 – Rs.100). Paytm’s price achieved this target in May 2023.
- Double Bottom: Paytm’s price formed a double bottom pattern from May 2023 to July 2023, which is a bullish reversal pattern that indicates a possible end of the downtrend and a start of a new uptrend. The double bottom is formed by two consecutive lows that are roughly equal, separated by a peak that forms a neckline. The reversal occurs when the price rises above the neckline. The target for this pattern is calculated by adding the height of the bottom to the breakout point. In this case, the height of the bottom is Rs.100 (Rs.600 – Rs.500), and the breakout point is Rs.600, so the target is Rs.700 (Rs.600 + Rs.100). Paytm’s price is currently trading near this target.
- Bullish Divergence: Paytm’s price formed a bullish divergence with the relative strength index (RSI) from June 2023 to July 2023, which is a bullish signal that indicates a weakening of the downtrend and a potential reversal to the upside. The bullish divergence is formed when the price makes lower lows while the RSI makes higher lows, indicating that the selling pressure is decreasing and the buying pressure is increasing. The reversal occurs when the RSI crosses above the 50 level, indicating a shift from bearish to bullish momentum.
Based on the technical analysis, Paytm share price has been in a downtrend with several bearish patterns and signals that indicate a continuation of the trend and a breakdown of new lows.
However, Paytm’s price has also formed some bullish patterns and signals that indicate a possible reversal of the trend and a breakout to new highs.
Paytm’s price has also been supported by some volume and momentum indicators, such as the moving average convergence divergence (MACD) and the stochastic oscillator, which indicates a positive divergence and a crossover from oversold to overbought conditions.
The table below shows the year-wise Paytm Share Price targets for the next 10 years based on the technical analysis:
|Year||Paytm Share Price Target (in Rs.)|
The Paytm Share Price Target is based on the assumption that Paytm’s price will reverse its downtrend and resume its uptrend, growing at a CAGR of 25%, which is consistent with its historical growth rate and its expected growth potential in the digital payments and financial services market in India.
Final Thoughts on Paytm Share Price Target 2023, 2024, 2025, 2027, 2030, and Long Term
In wrapping up, the dynamics surrounding the Paytm share price target showcase the evolving nature of India’s financial tech landscape.
As more users turn to digital payment platforms, Paytm’s valuation and market position will be influenced by a myriad of factors, from regulatory changes to competition and technological advancements.
Keeping an eye on these developments is crucial for investors and stakeholders alike. But remember, while predictions and targets provide insight, they’re not a guarantee.
Always do your due diligence before making investment decisions. Stay updated, and keep tracking the Paytm share price target for a clearer financial forecast.
FAQs on Paytm Share Price Target 2023, 2024, 2025, 2027, 2030, and Long Term
What is the target price of Paytm?
Many reputed brokers have set a target price of Rs 1,050 for Paytm’s stock, indicating a potential upside of 29% compared to Monday’s trading price. This forecast comes after well known brokers increased its FY25-26 Ebitda estimates for Paytm by 9-12%. The lending take rate has decreased to 3.5%, but there is an improvement in the asset quality of Paytm’s lending business.
What will be the Paytm Share Price Target 2023?
The Paytm Share Price Target in 2023 is prectibed to be between Rs 950 and Rs 1080.
What will be the share price target of Paytm in 2024?
The Paytm Share Price Target in 2023 is prectibed to be between Rs 950 and Rs 1080.
What will be the Paytm Share Price Target 2025?
The Paytm Share Price Target in 2023 is prectibed to be between Rs 1180 and Rs 160.
What will be the Paytm Share Price Target in 2027?
The Paytm Share Price Target in 2023 is prectibed to be between Rs 2640 and Rs 2760.
What will be the Paytm Share Price Target in 2030?
The Paytm Share Price Target in 2023 is prectibed to be between Rs 4500 and Rs 5150.
Is Paytm good for the stock market?
Yes, Paytm Money is a trustworthy and reliable stock broker in India. As a SEBI registered broker, it meets all the necessary certifications for conducting broking business. You can confidently use Paytm for stock market investments.