Paytm hits highest level in calendar year 2024; zooms 169% in 6 months

Analysts believe Paytm's cost optimization measures and gradual business turnaround will put it on an early path to profitability.

Shares of One97 Communications, which owns and operates fintech platform Paytm, rallied 7 per cent to Rs 849.50 on the BSE in Friday’s intra-day trade amid heavy volumes in an otherwise range-bound market. The stock price of the Fintech company was trading at its highest level in the calendar year 2024. It had hit a 52-week high of Rs 926.70 on November 23, 2023 and an all-time high of Rs 1,961.05 on November 18, 2021.

 

Till 02:43 pm; the average trading volumes at the counter rose nearly two-fold, with a combined nearly 20 million shares changing hands on the NSE and BSE. In comparison, the BSE Sensex was down 0.06 per cent at 79,498. In the past six months, Paytm has outperformed the market by surging 169 per cent, as compared to 8 per cent rise in the benchmark index. The stock had hit a 52-week low of Rs 310 on May 9.

 

One 97 Communications provides payment solutions, hotel booking, top-ups, data processing, gaming, mobile content, and bill payment services globally.

 

Since October 23, in the last13 trading sessions, the stock price of Paytm has surged 24 per cent after the company announced that National Payments Corporation of India (NPCI) granted approval to the company to onboard new UPI users, with adherence to all NPCI procedural guidelines and circulars.

 

Analysts at Emkay Global Financial Services believe Paytm’s cost optimization measures and gradual business turnaround will put it on an early path to profitability (EBITDA/PAT positive by FY26E/27E). The company has finally received NPCI approval for adding new UPI users, thus paving the way for re-accelerating its dwindling user-base and further signaling easing of regulatory stance, the brokerage firm said in the company’s Q2 results update.

 

Management expects new merchant onboarding and the Gross Merchandise Value (GMV) growth to pick up in Q3 due to the festive season, while it believes that once it receives the payment aggregator license, it would pave the way for onboarding new, large online merchants. On reviving its wallet business, management clarified that the wallet business, with the Paytm Payment bank business, remains under suspension and that it would wait for clarity from the Regulator before taking a call, analysts said.

 

According to analysts at Geojit Financial Services, Paytm delivered robust operational metrics in Q2FY25, which provided a sustainable outlook for the business. Cross-selling financial services opportunities in the merchant business would provide long-term support. New partnership in the payment business, prudent marketing spending plan, and focusing on reactivating customer base further aid its topline.  Margins are expected to improve with a further reduction in employee costs and continued automation.  Hence, the brokerage firm said they upgrade their rating on Paytm to ACCUMULATE based on a 6x FY26E P/S ratio, with a revised target price of Rs 854 per share.