Business
Goldman Sachs says Paytm’s current share price is a compelling entry point, ICICI Securities issue Buy rating
Paytm continues to get the confidence of top brokerages, who are bullish about the companys “immense growth potential”. Goldman Sachs pointed out the strong growth potential for Paytms lending business, saying the firm will hit $10 billion in disbursals by FY26E, vs $900 million in FY22.
Analysts believe Paytm’s ESOP costs will gradually reduce and are currently at par with other listed tech cos in India as well as globally ICICI Securities report said that by FY26, Paytm’s monthly transacting users are likely to double
Paytm, India’s leading digital payments and financial services, continues to get ‘Buy’ calls from top brokerages. After Goldman Sachs, BofA, Morgan Stanley and Dolat Capital, ICICI Securities has also issued a Buy rating for Paytm.
Goldman Sachs had given Paytm a Buy rating, with a target price of Rs 460 on February 7. On Monday, the investment bank reiterated its Buy rating, pointing out key notes for investors. The report said that “the current share price offers a compelling entry point into India’s largest and amongst the fastest growing fintech platforms”.
ICICI Securities has now initiated coverage for Paytm and highlighted the company’s strong growth potential in terms of target addressable market (TAM), giving a “Buy’ rating and target price of Rs 1,362.
Goldman Sachs highlighted that Paytm continues to gain market share across both UPI and non-UPI payments, besides strong growth in lending business. It said Paytm’s net payments take rate or spreads have, defined as revenue less payment processing charges (PPC) as a proportion of Gross Merchandise Value (GMV) have been improving.
“Paytm’s net payments take rate (or spreads, defined as revenue less payment processing charges as a proportion of GMV) have been improving. From 8 bps in 3QFY22, we forecast spreads to widen to 11 bps by FY26E as a result of Paytm’s scale benefits; increasing share of UPI for wallet money addition; rising share of wallet for online payments (vs in-store, which have zero MDR); and rising share of device rental revenues,” the brokerage noted.
Paytm’s ESOP costs to gradually reduce, currently at par with other listed tech cos in India as well as globally.
Goldman Sachs noted that Paytm’s Employee Stock Ownership Plan (ESOP) costs will reduce gradually and is currently at par with other listed tech companies in India as well as globally.
“We forecast ESOP charge for Paytm to be highest (at Rs 3.9 billion per quarter) for first two years (when the first tranche vests, per Paytm), and then gradually reduce over the next three years. Paytm also has about 15 million un-granted options and per our estimate, the total share count could increase by 46 million (or 7 per cent of current outstanding), if all options were to be vested/granted,” said the Goldman Sachs note.
“We note that as a proportion of total operating expenses, Paytm’s ESOP cost is not significantly different vs other global platforms such as Airbnb and DoorDash, as well as recently listed India internet peers such as Zomato and PB Fintech.”
Meanwhile, ICICI Securities in its note called out Paytm’s immense growth potential in terms of target addressable market (TAM), buoyed by its leadership position in India’s digital payments ecosystem.
The brokerage said Paytm’s digital payments business has the potential to grow strongly in future, reflecting its “sizeable two-sided digital ecosystem with proven leadership in payments”.
“Paytm is well ahead in the race of digitisation, building a robust full stack technology suite integrated across the ecosystem with distinct features, high success rates, easy user interface, and customer convenience. It has an early mover advantage in rolling out wallet, FASTag, and is ahead of the curve in (skill based) online gaming, too,” said the note by ICICI Securities.
During the October-December quarter, the company saw its revenues jump by 89 per cent y-o-y to Rs 1,456 crore, EBITDA losses (before ESOP expense) came down to Rs 393 crore from Rs 488 crore during the same quarter in the previous year.
In its latest filing with the stock exchange, Paytm had shared its highest ever growth in monthly transacting users to 68.9 million users. Now, it seems analysts are bullish about this growth momentum to continue. ICICI Securities highlighted that Paytm’s monthly transacting user base (MTUs) is likely to double over FY22-26E to more than 120 million.
Paytm had said that in Q3 FY 22, its merchant payments-led GMV stood at Rs 2.5 lakh crore. Analysts at ICICI Securities forecast that Paytm’s merchant GMV would grow at 36 per cent CAGR over FY22-26E to reach Rs 30 trillion and within this, MDR linked GMV is estimated to grow at more than 25 per cent.
The brokerage noted that Paytm’s contribution margin has potential to further improve 40 per cent-46 per cent by FY24E/FY26E.
“Aided by this contribution margin, there is some visibility of EBITDA getting into positive territory post FY26E. Adjusted EBITDA margin (excluding non-cash ESOP charges) will turn positive by FY26,” it added.
Both Goldman Sachs and ICICI Securities believe that Paytm’s lending business, in which it partners financial institutions to provide loans on its platform, has the potential to grow rapidly in the medium term.
Goldman Sachs said: “We believe Paytm will be able to continue to scale its lending portfolio, and forecast $10 billion in disbursals by FY26E, vs $900 million in FY22. Paytm has continued to add new partners for its lending products over the last few quarters, suggesting to us that lenders are finding value in this partnership.”
Paytm’s lending business witnessed record growth in January 2022, maintaining the positive trend witnessed in the Q3 FY 22 earnings. Last month, Paytm registered 1.9 million loan disbursals, marking a y-o-y growth of 331 per cent; aggregating to a total value of Rs 921 crore (y-o-y growth of 334%). This also included a staggering growth in its Buy Now, Pay Later product – Paytm Postpaid.
“For Paytm’s BNPL product, 30 per cent + of the monthly sign-ups (Dec ’21 quarter) were new-to-credit customers, helping expand the credit base for Paytm’s financial partners. Per Paytm, performance of the company’s loan portfolio has resulted in higher confidence from lenders to increase the scale of this business,” it added.
Meanwhile, ICICI Securities also shared an optimistic outlook about Paytm’s lending business, estimating 18-19 million consumers (15 per cent of MTUs), and an increasing number of merchants to avail lending products through Paytm platform by FY26E.
Sharing a medium-term outlook, it estimated the total lending business revenue to grow at 61 per cent over FY22-26E.
Business
Bharat Mobility Global Expo 2025: Toyota & Lexus Unveil Future Projects In Indian Portfolio; Images Below
New Delhi: Japanese car maker Toyota and it’s luxury arm, Lexus have showcased some of their future models from their respective India portfolios at the Bharat Mobility Global Expo 2025. Toyota’s standout concepts include the X-Van, bZ4X, and Urban EV, while Lexus has captivated audiences with the ROV Concept 2 and LF-ZC.
Toyota’s star studded lineup
Moreover, Toyota showcased some of its updated and facelifted models during the autoshow. The Japanese car maker features included the Prius Flexi-Fuel PHEV, the Hilux FCEV, and a detailed cross-section of the Innova Hycross hybrid. Additional highlights include the striking Hilux Black Edition and the Land Cruiser 300 GR Sports, adding excitement to the brand’s lineup.
Toyota X-Van (Concept)
The X-Van, envisioned as a futuristic MPV, is designed to redefine spaciousness and versatility to meet diverse customer needs. This boxy, three-row utility vehicle eliminates the B-pillar, resulting in an expansive glasshouse and flexible seating configurations, available in 1-3-2 or 2-2-2 layouts. It features sliding suicide doors, a three-pane sunroof, and robust plastic cladding on the lower sections, adding a rugged and bold aesthetic to its innovative design.
Toyota BZ4X
The bZ4X electric SUV concept, first unveiled in 2021, is built on the e-TNGA architecture developed with Subaru. Its design features sharp styling, chunky black wheel-arch trim, a contrasting roof, and a silhouette influenced by the popular RAV4 SUV. The front showcases Toyota’s ‘Hammerhead’ design language, reminiscent of the latest Camry sold in India.
In global markets, the production-spec bZ4X comes with a 71.4kWh battery, offering a WLTP range of 450km. It’s available in two variants: a single-motor version (204hp, 265Nm) and a twin-motor AWD version (218hp, 336Nm).
Lexus LF-ZC (Concept)
The Lexus LF-ZC concept offers a glimpse into the premium electric sedan slated for international launch next year. Designed with a modular structure, its centrally placed batteries free up space for versatile front and rear configurations, supporting both single- and dual-motor setups. Lexus claims the top-spec LF-ZC will deliver a range exceeding 1,000km upon production.
The concept features Lexus’s latest design language, emphasizing sharp, aerodynamic styling. Inside, it boasts a futuristic cockpit with a steering yoke incorporating steer-by-wire technology and digital control pads seamlessly integrated across the cabin.
Business
Maha govt signs 31 MoUs for investment proposals worth Rs 6,25,457 crore at Davos
Mumbai, Jan 22: The Maharashtra government has signed a record 31 MoUs with investment proposals worth Rs 6,25,457 crore in the field of steel, metals, renewable energy, infrastructure, cement, Lithium-Ion Batteries and Solar Modules on the sidelines of World Economic Forum summit at Davos.
The MoUs were signed on Tuesday in the presence of Chief Minister Devendra Fadnavis and senior government officers.
CM Fadnavis said, “The MoU signed today paves the way for Maharashtra’s comprehensive growth and development.” He further stated that this marks a new record for securing such a significant investment amount in a single day. Similarly, several investment agreements are expected on the second day as well.
Of the Rs 6,25,457 crore, JSW will invest a record Rs 3 lakh crore for Maharashtra’s Green Transformation and Tata Group will also make an investment of Rs 30,000 crore in multiple sectors.
The Chief Minister met with key executives of several companies and invited them to invest in Maharashtra. Among these, Tata Group Chairman N. Chandrasekaran held discussions with CM Fadnavis during which it was confirmed that the Group would invest Rs 30,000 crore in the state. The CM also met Carlsberg Group CEO Jacob Aarup-Andersen, who expressed interest in investing in Maharashtra.
The Chief Minister assured him of full cooperation for the group’s plans. Additionally, M.A. Yusuff Ali, Managing Director of the Lulu Group, conveyed interest in investing in Nagpur and expanding operations in Maharashtra.
CM Fadnavis held discussions with ReNew Power Chairman and CEO Sumant Sinha about a 15,000 MW pipeline and wind energy projects in the Beed district. Schneider Electric India’s Managing Director and CEO Deepak Sharma also met the Chief Minister. Discussions included the use of AI in the energy sector and strengthening ITIs in the state with assistance from the World Bank. Expansion plans in Ahilyanagar and Nashik were also hinted at. Mastercard APAC President Ling Hai held talks with CM Fadnavis, while Louis Dreyfus Company CEO Michael Gelchie discussed opportunities in agriculture, food processing, international shipping, and financial sectors. Emphasis was placed on enhancing collaboration in agriculture. The CM also met Cognizant CEO Ravi Kumar S. and discussed potential investments and opportunities.
“The series of meetings highlighted Maharashtra’s focus on attracting substantial global investments and fostering economic development,” said the Chief Minister’s Office in a release.
CM Fadnavis in his post on X said, “Extremely happy to witness the historic Rs 3,00,000 crore MoU signing between Govt of Maharashtra & JSW Group, with an employment generation of 10,000 in the regions of Chhatrapati Sambhajinagar, Gadchiroli, and Nagpur. Very much thankful to Sajjan Jindal ji for being a part of this historic moment at Davos, which will give a huge boost to Maharashtra’s industrial environment. It will give a big boost to Maharashtra’s industrial environment. The areas of this investment like Renewable Energy, Infrastructure, Cement, Lithium-Ion Batteries, and Solar Modules will play a huge role in our mission ‘Green Maharashtra.”
The government signed an MoU with Waaree Energy with a total investment of Rs 30,000 crore in green energy and solar components. it will create 7,500 jobs. The company chairman Hitesh Joshi was present.
The government inked an MoU with Blackstone-Panchshil Realty for an investment of Rs 25,000 crore for the development of the data centre. It will generate 500 jobs. Further, Blackstone will invest Rs 25,000 crore in Information Technology in the Mumbai Metropolitan Region. It will create 1,000 jobs.
The government inked an MoU with Erulearning Solutions for an investment worth Rs 20,000 crore in education. The government signed an MoU with ZR2 Group for investment worth Rs 17,500 crore in automobiles and EVs in Pune region to generate 4,000 jobs.
The state government and Balasore Alloys Ltd signed an MoU for investment of Rs 17,000 crore in steel and metals. The venture will generate 3,200 jobs. The company was represented by Satish Kaushik at the time of the signing of the MoU.
The state government and Reliance Infrastructure Ltd signed an MoU for investment worth Rs 16,500 crore in the defence sector. It will generate 2,450 jobs. The company was represented by Sateesh Seth.
Powerin Urjaa will invest Rs 15,299 crore in green energy and generate 4,000 jobs. Open Origin India Inc will invest Rs 15,000 crore in green energy to create 1,000 jobs.
Viraj Profiles Pvt Ltd and the state government inked an MoU for the investment of Rs 12,000 crore in steel and metals to generate 3,500 jobs. Neeraj Raja Kochhar, Chairman and MD of Viraj Profiles was present at the time of the signing of the MoU.
Avani Power Batteries will make investment of Rs 10,521 crore in electronics to generate 5,000 jobs in Chhatrapati Sambhajinagar. H2e Power will invest 10,750 crore in green energy to create 1,850 jobs in Pune region.
The government signed an MoU with Rural Enhancers for investment worth Rs 10,000 crore in social sectors including hospitals.
The government inked an MoU with Welspun for an investment worth Rs 8,500 crore in logistics to generate 17,300 jobs.
Essar in partnership with Blue Energy will invest Rs 8,000 crore in green energy to create 2,000 jobs.
Further, United Phosphorus will make an investment of Rs 6,500 crore in green energy to generate 3,000 jobs. The government signed an MoU with Olectra EV for investment worth Rs 3,000 crore in automotive and EV to generate 3,000 jobs.
Kalyani Group will invest Rs 5,250 crore in defence, steel and EV. It will create 4,000 jobs. The MoU was signed in the presence of CM Fadnavis and Vice-Chairman & Joint MD of Bharat Forge Limited Amit Kalyani. “Thank you Amit Kalyani for joining this MoU signing at Davos! This investment is special because it is coming to Gadchiroli, which will give better lives to so many,” said the chief minister.
Gensol will invest Ra 4,000 crore in electronics in Chhatrapati Sambhajinagar to create 500 jobs. The government inked an MoU with & El Mont for the investment of Rs 2,000 crore in infrastructure. It will generate 5,000 jobs. The company director Kabir Bhandari was present.
BookMyShow will invest Rs 1,700 crore in the entertainment sector to generate 500 jobs. Further, the government signed an MoU with Tembo for an investment worth Rs 1,000 crore in the defence sector. It will create 300 jobs. The company director Shabbir Merchant was present on the occasion.
The government also inked an MoU with AB InBev in the F&B segment for investment worth Rs 750 crore. Kartikeya Sharma, President, India & South East Asia of AB InBev was present on the occasion.
Moreover, the government inked an MoU with CEAT Limited for investment worth Rs 500 crore in automotive and EC to generate 500 jobs.
Bisleri International will invest Rs 250 crore in food and beverages in the Mumbai Metropolitan Region to create 600 jobs. The MoU signed paves the way for Maharashtra’s comprehensive growth and development.
Business
India sees surge in deal activity at record $116 billion in 2024
New Delhi, Jan 21: India’s deal-making landscape witnessed a landmark year in 2024, with a record 2,186 deals valued at $116 billion, marking a 33 per cent increase in volumes and 76 per cent surge in values (year-over-year), a report showed on Tuesday.
Driven by India’s status as the fastest-growing G20 economy, with a 7 per cent growth rate driven by robust domestic demand, the country’s deal-making activity reached new heights, defying global economic uncertainty, and demonstrating the resilience of its economy, according to the Grant Thornton Bharat ‘Annual Dealtracker 2024’.
“As we look ahead to 2025, we are optimistic about the prospects for continued robust deal activity, fuelled by government reforms, a stable economy, and a thriving tech ecosystem, making India an attractive destination for investors despite global uncertainties,” said Shanthi Vijetha, Partner, Growth at Grant Thornton Bharat.
The mergers and acquisition landscape witnessed a record-breaking year, with 683 deals valued at $44.1 billion, marking a 37 per cent increase in volumes and a 75 per cent surge in values compared to the previous year.
Domestic consolidation drove growth, with 479 deals amounting to $23.5 billion, a 64 per cent increase in values, led by Indian conglomerates such as Adani Group, Aditya Birla Group and Nazara Technologies.
Outbound M&A also witnessed significant growth, with 121 deals valuing $16.9 billion, driven by two billion-dollar deals, according to the report.
The private equity landscape demonstrated resilience in 2024, with 1,298 deals raising $31 billion, up from 1,046 deals valuing $27.4 billion in 2023.
The year witnessed a 26 per cent rise in high-value deals (estimated at and over $100 million) and two billion-dollar deals.
The initial public offerings (IPO) activity reached unprecedented heights in 2024, defying global economic headwinds, with 86 listings raising a record $21 billion, more than triple the $6.2 billion raised in 2023, said the report.
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