Warren Buffett, Jack Ma-Backed Paytm Is Down 60% Since IPO Debut — Analyst Sees It Doubling From Current Levels

Digital payments service provider Paytm – backed by Billionaire Warren Buffett‘s Berkshire Hathaway BRK BRK and Jack Ma's Alibaba Group Holding Ltd BABA – saw a turbulent debut on the Indian stock exchanges last year, but it is back again in the top analyst's recommendation list. 

What Happened: Indian brokerage ICICI Securities has initiated a Buy call for Paytm stock – which has lost about 60% of its value since the IPO got listed last year around the same time – with a target price of INR 1,285, double its current level.

The stock debuted at about INR 1,560 ($19.14) and closed the last trading session on Tuesday at INR 651.90 ($8) per share. 

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The company on Monday reported a consolidated loss of about INR 5.71 billion ($70 million) for the September 2022 quarter. Although the loss widened compared to the same quarter last year, the brokerage said its revenue and margin profile continues to "improve."

“In the commerce business, the company makes sure that cashback incentives are not more than margins. This business has also turned profitable at the operating level,” the brokerage said in a note. 

In the last quarter, Paytm, which also counts Japanese conglomerate ​​SoftBank Group SFTBY among its investors, reported 55% year-on-year growth in Commerce and Cloud revenues. 

Rajiv Talreja, Indian business coach and entrepreneur who went viral recently for his candid comments on Paytm, had told Benzinga in May that the company's IPO was “massive hype” and the country's startup ecosystem was in for a “major correction.”

In May, Alibaba and Ant Financial also sold their entire stake in the e-commerce subsidiary Paytm Mall for INR 42 crore. The deal valued Paytm Mall at just $12 million (INR 100 crore) — significantly lower than 2020 when it was valued at $3 billion (INR 21,000 crore).

Price Action: Shares of Paytm, which is owned by One97 Communications, were trading 0.25% higher on Wednesday afternoon (local time) and have lost over 51% since the beginning of the year.

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