Following a revision in the circuit filter, shares of One 97 Communications Ltd, the parent company of Paytm, experienced robust buying activity on Friday. Opening upside at ₹349 apiece on the NSE, the company’s shares surged to an intraday high of ₹381.30 per share. Notably, during this climb, Paytm’s share price hit the 10 percent upper circuit. The NSE recently updated the circuit filter for Paytm shares from 5 percent to 10 percent. Paytm attributed its Q4FY24 results to a temporary disruption affecting the company’s performance.
After the announcement of Paytm’s Q4 results, global brokerages Bernstein and Morgan Stanley reported encouraging signs of stabilization and recovery in key business metrics. Bernstein highlighted that Paytm’s Gross Merchandise Value (GMV) in April reached about 81% of January levels, signaling positive momentum and a significant improvement from recent lows. Similarly, Morgan Stanley observed a moderation in GMV growth quarter-on-quarter, with a year-on-year increase of 30% compared to the previous 47%. These positive trends in key business metrics are expected to inspire confidence in Paytm’s future prospects.
Bernstein noted, “Excluding discontinued products, consumer payment GMV recovered to around 85% of January values, while merchant GMV reached 94%. Combined GMV now stands at 93% of January values, showcasing a clear improvement from the low point in March 2024.” The brokerage also highlighted that lending volumes picked up pace, with merchant loans recovering to 86% of January values. Although the recovery in consumer lending is slower, volumes stand at 75% of January values.
Morgan Stanley reported that Paytm’s registered merchant base continued to grow, albeit at a slower pace, with 1.3 million new additions in the fourth fiscal quarter. “Device penetration also showed slight moderation, moving from 27% to 26%,” the brokerage noted.
Analysts have set a target price of ₹410 per share for Paytm in the near term, advising shareholders to hold the stock with a trailing stop loss at ₹350 for a short-term target of ₹410. If this hurdle is crossed, Paytm’s share price may reach ₹450 in the next 1-2 months. For fresh investors, it is suggested to buy the stock at the current market price and maintain a buy-on-dips strategy as long as the stock remains above ₹350, with target prices of ₹410 and ₹450 per share, while keeping a stop loss at ₹350 apiece.
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