Paytm: On March 19, One 97 Communications, the parent company of Paytm, saw its share price rise nearly 5% from the previous session. In just three days, the stock has risen by 14%.
The payments company’s shares saw a huge increase when Yes Bank Securities upgraded it from “neutral” to “buy” and increased its target price from Rs 350 to Rs 505.
The negativity surrounding Paytm has somewhat diminished after NPCI approved the company to operate as a third-party application provider (TPAP) within the UPI system, empowering it to facilitate payments.
Yes Securities has attributed Paytm’s rating upgrade to several factors, including reduced reliance on the wallet business for revenue, effectively managed client losses amid reputational damage, increased addition of partners, and the company’s competitive nature.
Yes Securities remarked that past achievements underscore Paytm’s competitive spirit as a company. “After receiving input from regulators and undergoing a process of risk reduction, we are now optimistic about a more stable future for Paytm,” the firm stated.
Paytm is valued by the brokerage at 2.7. times FY25E P/S, implying a 78 percent EPS CAGR from FY28 to FY31E. “Our assumptions do not include any rehabilitation of OCL’s Wallet business. We’ve projected a somewhat limited outlook for the loan distribution company. The market is currently pricing for an even more acute scenario,” it stated.
It added that the encounters with the regulator might finally be resolved, and the majority of the drawbacks are already accounted for in the price.
Yes Securities analysts warned that discontinuing the wallets business will hurt Paytm’s revenues in the short term. “The loan distribution is currently halted and remains a drag on growth,” they further remarked.
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As of 11:35 am, Paytm was priced at Rs 408.45 on the National Stock Exchange (NSE), marking a 4.95 percent increase from the previous session. Over the past month, the stock has surged by 14 percent. However, year-to-date, it has experienced a decline of 36 percent.
