In a massive comeback after the drubbing in 2022, when Paytm’s shares tanked almost 70%, the fintech giant’s shares are trading over 80% higher year to date (YTD). 

In fact, helped by its reducing losses and rising revenues on the back of the growth in lending and payments businesses, shares of Paytm have surged 50% in the last six months.

In mid-April, the fintech major’s market cap stood at a little over $5 Bn with shares hovering between INR 600-INR 650. In contrast, its market capitalisation stood at about $7.3 Bn at the end of Thursday’s (October 12) session, with share price at INR 957.60. 

The Paytm stock was hit by multiple issues in 2022. The slump in global tech stocks, India’s regulatory environment for fintechs, growing competition, and the company’s rising expenses kept Paytm’s shares under pressure last year.

The month of November was one of the worst months for Paytm as the expiry of the lock-in period for its investors resulted in heavy selling. Softbank, one of the major early backers of the company, offloaded a portion of its stake, while several others also sold Paytm shares in the following months.

While the stock remained volatile earlier this year as well, an uptrend was clearly visible from the time Paytm started reporting a decrease in its year-on-year (YoY) loss, starting Q3 FY23.

The strong growth in the company’s lending business also provided a boost to its stock price this year. Meanwhile, Zomato, another new-age tech startup, reporting its maiden profitable quarter in Q1 FY24 turned sentiment towards new-age tech stocks positive, which also helped Paytm.

Lending Business Driving The Growth

In its last reported quarter – Q1 FY24, Paytm’s consolidated net loss declined 44.5% YoY to INR 358.4 Cr while operating revenue jumped 39% to INR 2,342 Cr. 

Revenue from payments services contributed INR 1,414 Cr (up 31% YoY) to the total revenue in Q1, while the financial services vertical contributed INR 522 Cr (up 93% YoY).

The company has been posting impressive growth in the quantum and value of loans disbursed for months now. 

In the June quarter (Q1), Paytm disbursed 1.28 Cr worth INR 14,845 Cr. In the quarter before that, Q4 FY23, Paytm’s loan distribution number stood at 1.2 Cr worth INR 12,554 Cr. In August alone, the fintech giant disbursed 43 Lakh loans worth INR 5,194 Cr as against 40 Lakh loans in June worth INR 5,227 Cr.

Several brokerages have also projected a steady sequential loan growth for the overall fintech ecosystem in Q2 FY24, which has made their stance on Paytm even stronger.

Bernstein projects Paytm’s lending business to register a 50% CAGR between FY23 and FY30. 

Meanwhile, Motilal Oswal estimates that the value of loans disbursed by Paytm would jump 135% YoY and 16% sequentially to INR 17,200 Cr in Q2.

It must be noted that the Street continues to be bullish on Paytm despite the fears of disruption in the Indian fintech ecosystem by the entry of deep-pocketed Jio Financial Services. 

Besides, Paytm is also riding the digital payments wave in the country. The subscriptions for its payment devices and the payments volume on its platform are growing steadily.

On the back of all these, shares of Paytm hit a new 52-week high in three consecutive days this week, including today’s session. 

Amid significant volatility in the broader market today, Paytm’s shares jumped 1.3% in the early trading hours today to touch a 52-week high of INR 984.9 on the BSE. However, the stock shedded the gains to end the trading session nearly 1.5% lower. 

The company’s shares are currently at a level last seen in February 2022.