Paytm hits 52-week high; surges 20% in 6 days on BofA's 'buy' call

Shares of One97 Communications (Paytm) hit a 52-week high of Rs 854.90, gaining 2 per cent on the BSE in Wednesday's intra-day trade. In the past six trading days, the stock of the fintech company has rallied 20 per cent after brokerage firm BofA Securities upgraded the stock to 'buy' citing its dominant position in the payment industry. The foreign brokerage firm has upgraded the target to Rs 885 per share.

The stock surpassed its previous high of Rs 844.40, touched on August 8, 2022. It had hit a record high of Rs 1,961 on November 18, 2021. With the past six days' rally, the stock has bounced back 94 per cent from its record low level of Rs 439.60, hit on November 24, 2022.

"We find Paytm well positioned to continue to dominate the SME merchant landscape where the subscription model via soundbox is improving merchant stickiness. We expect Paytm's momentum in buy-now-pay-later (BNPL)/merchant lending to continue, albeit at a slower pace, leading to 34 per cent revenue CAGR (compound annual growth rate) from FY23-26 (financial year 2023 to 2026),” BofA Securities said in a note.

Paytm has kicked off the current year on a high note, witnessing a remarkable upturn in its business performance. The company has experienced a continuous surge in consumer engagement, evident from the impressive average monthly transacting users (MTUs) for April-May 2023, which reached a staggering 92 million. Comparatively, this figure marks a significant growth from the 74 million MTUs recorded during the same period the previous year.

As a result of this sustained consumer interest, Paytm has witnessed a substantial increase in its overall Gross Merchandise Value (GMV), soaring from Rs 1.96 trillion in April-May 2022 to an impressive Rs 2.65 trillion during the same period in 2023, Vinit Bolinjkar, Research analyst, Ventura Securities said.

"Paytm's stock is currently trading at a reasonable FY26 P/S ratio of 3.3X. This valuation is well-aligned with the company's status as a high-growth entity operating within an evolving industry. We would recommend to hold this stock for long-term gains," he added.