Paytm has reported solid asset performance across its lending partners’ portfolios. (document)

New Delhi:

Brokerage firm Citi remains bullish on Paytm, even as the stock continues to be hammered on the stock exchange.

Citi has a “buy” rating on Paytm with a target price of Rs 1,055.

At the close on the BSE today, Paytm fell 2.49% to Rs 441.05.

Paytm operator One 97 Communications has recorded its worst first-year share price slump among major IPOs (initial public offerings) of the past decade, according to Bloomberg.

“The company’s founders compared the challenges it faced to Tesla’s shortly after listing, whose stock lost 75 percent of its value a year after its $2.4 billion offering, the largest ever in India at the time. IPOs. Global IPOs that raised at least the same amount of money had the biggest first-year drop since Spain’s Bankia SA’s 82% drop in 2012,” Bloomberg reported.

The Citi report comes a day after global investment group Prosus commented on its Indian payments business. Prosus said: “In India, our largest payments market, TPV (total payments value) grew 59% to $28 billion and revenue rose 48% to $183 million as e-commerce, financial services and bill payment digitized. dollar, and the rebound in travel post-pandemic.”

PayU is the fintech and payments arm of Prosus.

In comparing it to PayU, Citi said that Paytm has gained market share in the digital payments space relative to PayU.

On the basis of total payment value (TPV) generated by merchant discount rate (MDR), PayU grew 59% in the January-June period, while (Paytm) grew 52%, Citi said.

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In the buy now pay later (BNPL) segment, Paytm has seen faster growth in active customer base compared to PayU’s Lazypay.

Lazypay’s reported loss ratio increased 30 basis points to 3.1% compared to 2021, which is “something to watch for the broader BNPL space in India,” Citi said.

Paytm has reported stable asset performance in its lending partner portfolio, with losses of 1.1-1.3% on BNPL products.

“We acknowledge that the risks of further sell-off by existing pre-IPO are excessive, and that fintech is a highly competitive space, but at these valuations, these risks are excessive,” Citi said.

“Based on our quantitative model, the stock is High Risk, but its healthy net cash position and likely declining cash burn going forward do not support the High Risk rating,” Citi analysts said.

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