One 97 Communications, the parent company of Paytm, saw its share price continue to climb on March 19, extending gains from the previous session by nearly 5 percent. Over the course of three days, the stock has surged by 14 percent.
This significant rally follows an upgrade by Yes Securities, which raised the payments company’s stock rating from “neutral” to “buy” and increased the target price from Rs 350 to Rs 505.
The recent optimism surrounding Paytm stems partly from NPCI’s approval allowing the company to participate in UPI as a third-party application provider (TPAP), which enables Paytm to facilitate payments.
Yes Securities cited several factors for the rating upgrade, including Paytm’s decreasing reliance on the wallet business for revenue, limited client losses despite reputational damage, increasing partner additions, and the competitive nature of the company.
The brokerage firm emphasized Paytm’s competitive DNA, highlighting past successes and expressing confidence in a less volatile future after feedback from regulators and risk mitigation efforts.
Yes Securities values Paytm at 2.7 times FY25E P/S, projecting an FY28-31E EPS CAGR of 78 percent. The brokerage acknowledges constraints in the loan distribution business and does not assume a revival of OCL’s wallet business in its assumptions.
While cautioning about the short-term impact of discontinuing the wallets business on revenues and the current stall in loan distribution, Yes Securities believes that most negatives are already factored into the price.
As of 11:35 am, Paytm was trading at Rs 408.45 on the National Stock Exchange (NSE), up by 4.95 percent from the previous session. Despite a 14 percent rally in the past month, the stock remains down by 36 percent year-to-date.
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