Analysts are looking cautiously optimistic about fintech major Paytm‘s upcoming quarterly financial results after the company posted strong operational metrics for the most recent quarter.

What Do Analysts Say? Analysts at Citi Research raised their target price for parent One97 Communications‘ shares to ₹1,160 from ₹1,144 while maintaining a “buy” rating.

The analysts expect net payment margins, which refers to payment revenues less payment processing charges, at 14 basis points, which would be 110 basis points higher than a year ago. The analysts at the brokerage also estimate an 8% quarter-on-quarter improvement in contribution profits (excluding UPI incentives in Q4) to Rs 1,190 crore.

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The analysts also upgraded forecasts for FY24 and FY25 adjusted EBITDA estimates by 29% and 22%, respectively, on the basis of higher estimates for lending distribution.

However, the analysts do expect adjusted EBITDA margins and EBIT margins to dip marginally to around 2% and -5% respectively from the preceding quarter. However, these are still higher than quarterly numbers a year ago of -16% and -22%, respectively.

Meanwhile, Morgan Stanley maintained an “equal-weight” rating on Paytm with a price target of ₹750. Analysts at the brokerage did flag regulatory uncertainty for the firm as the Reserve Bank of India has banned new customer onboarding at Paytm Payments Bank and has yet to clarify changes to digital payment charges.

Price Action: Paytm’s share price fell 1.83% to ₹854 in afternoon trade amid broader market weakness on Friday.

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