Shares of Paytm and Zomato were trading in the green territory on BSE in Wednesday’s trading session. Paytm stock jumped over 3 per cent to hit a day’s high of Rs 615.70, while shares of Zomato were up 2.6 per cent to hit a day’s high of Rs 55.35.
Paytm stock came into the limelight after a media report suggested that China’s Ant Group and Japan’s SoftBank Group Corp were looking to sell their stake in digital payments. However, Paytm rejected reports that any major shareholders are offloading shares in the company. The company is not part of any negotiation and there is no sequence of events available, it said.
Zomato is also in focus as it has launched a new Zomato Everyday service. The new Zomato Everyday service will primarily serve food to a demographic that stays away from their families and doesn’t always have access to home-cooked meals.
JP Morgan has maintained its bullish stance on Paytm and Zomato. In Paytm’s case, it highlighted that the adjusted Ebitda profitability was achieved three quarters ahead of schedule, while Zomato’s core business achieved an Adjusted Ebitda break even in the month of January.
“Profitability across contribution margins (CM) and Adj. Ebitda improved for all, as companies shifted focus to profit over growth, and platform economics to an extent has begun playing out,” it said.
Notably, Macquarie has doubled-upgraded the Paytm stock to ‘Outperform’ from ‘Underperform’. “Since our last target price cut, Paytm has positively surprised on the distribution of financial services revenue by a wide margin and has also managed to control overall expenses and charges,” it said.
In March 2022, the global financial major slashed its price target for the digital major Paytm citing regulatory headwinds including a falling probability of getting a banking licence. It initiated coverage on the stock in November 2021 with a target price of Rs 1,200, which was cut to Rs 700 and then further slashed to Rs 450.
CLSA expects Zomato to continue its march towards profitability. It has a ‘Buy’ rating on the stock with a target price of Rs 70.
Q3 performance
Paytm narrowed its consolidated net loss to Rs 392 crore in the third quarter (Q3) that ended December 2022 (FY23) against a net loss of Rs 778.40 crore in the same period a year ago. In addition, Paytm posted its first quarterly positive cash EBITDA of Rs 30 crore in Q3 FY23, three quarters ahead of company guidance (of September 2023).
Zomato’s September quarter loss also narrowed to Rs 250.80 crore compared to a Rs 434.90 crore loss in the corresponding quarter of the last fiscal. However, the Q2 loss was higher than Rs 186 crore loss in the June quarter of the current fiscal.
Paytm, Zomato on D-Street
Shares of Paytm hit its 52-week high of Rs 844.40 on August 08, 2022. The stock is down over 28 per cent from its 52-week high. However, it is up over 39 per cent from its 52-week low of Rs 439.60.
Likewise, Zomato stock is also down over 38 per cent from its 52-week high of Rs 88.40. The stock has recovered over 32 per cent from its 52-week low of Rs 40.55.
Notably, Mutual funds have also increased exposure to many new-age stocks including FSN E-Commerce Ventures (Nykaa), One97 Communications (Paytm), PB Fintech (Policybazaar) and Zomato in January amid December quarter earnings. A few new-age companies later came out with a healthy set of results, leading to rating upgrades.
Also read: Paytm, Zomato, Nykaa, PB Fintech: Mutual funds bought these new-age stocks this earnings season
