The research house stuck to its ‘equal-weight’ rating and the target price of Rs 695 on the stock, implying a potential upside of nearly 50% from the current levels.
Shares of Paytm were up 0.48% at Rs 467.45 apiece at 10:40 a.m., while the benchmark Nifty 50 gained 0.16%.
Citi, in a note dated Nov. 23, too, remained bullish on the Vijay Shekhar Sharma-led payments firm. It has a ‘buy’ rating with a target price of Rs 1,055 on the stock, implying an upside of over 134%.
Citi said Paytm has gained market share in digital payments versus PayU’s LazyPay in the first six months of 2022.
“In the buy now, pay later segment, Paytm is seeing faster growth in its active customer base versus PayU’s Lazypay. Lazypay’s reported loss rate has increased year-to-date in 2022 to 3.1% (+30 bps versus CY21), which is something to keep an eye on in India’s broader BNPL space.
Despite the fact that there are overhang risks in Paytm from additional selling by existing pre-IPO shareholders and that fintech is a competitive space, Citi believes that “at these valuations, those risks are overdone.”
The stock is trading at five times the FY24-estimated enterprise value-to-contribution profit, according to Citi.