 "Paytm")
UBS on Paytm: Shares of Paytm, owned and operated by One 97 Communications, were in demand on Thursday, November 28, 2024, as the scrip soared up to 2.60 per cent to hit a fresh 52-week high of Rs 942.55 per share.
The rally in Paytm share price followed an update from UBS, a New York-based financial services firm, which raised its target price for the stock to Rs 1,000 from Rs 490, citing that significant improvements have already been factored into the valuation, according to reports. Despite the increased target, UBS maintained a 'Neutral' rating on the stock.
The revised target price represents a 8.85 per cent upside from the previous day's (November 28) closing price of Rs 918.65. Notably, this new target is more than double UBS's earlier projection of Rs 490 per share.
UBS highlighted that further business growth must now be driven by revenue, as most cost optimisation efforts have already been realised.
The brokerage projects Paytm's FY26 revenue to align with FY24 levels, with adjusted earnings before interest, tax, depreciation and amortisation (Ebitda) expected to break even by Q4FY25, the report said.
It also noted that the stock has undergone a sharp re-rating following the resolution of regulatory challenges.
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At the beginning of the year, Paytm encountered several regulatory challenges, particularly concerning compliance with data protection and risk management standards. In January, the Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank (PPBL) due to shortcomings in these areas. The RBI highlighted issues related to the bank's risk management processes and adherence to data protection regulations, prompting increased scrutiny.
Paytm Q2 results
Paytm's consolidated net profit zoomed to Rs 930 crore for the second quarter ending September 30 (Q2FY25), from Rs 290 crore in the same quarter a year ago (Q2FY24). The profit surge was primarily driven by a one-time gain of Rs 1,345 crore from the sale of its movie ticketing business to Zomato.
Revenue from operations, or topline, for Q2FY25 stood at Rs 1,659 crore, reflecting a 34 per cent year-on-year (YoY) decline from Rs 2,518 crore in the same period last year.
During the quarter, Paytm’s Gross Merchandise Value (GMV) grew 5 per cent sequentially.
At 9:25 AM, the Paytm shares were trading 1.76 per cent higher at Rs 934.85 per share. In comparison, BSE Sensex was trading marginally lower (0.03 per cent) at 80,211.91 levels.
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