Shares of Paytm, run by One97 Communications, saw strong demand on Thursday. Check the latest target price.
Shares of Paytm, operated by One97 Communications, saw strong demand on Thursday, November 28, 2024. The stock rose as much as 2.60 percent to a fresh 52-week high of Rs 942.55 per share.
The rally followed an update by New York-based financial services firm UBS, which raised its target price for Paytm to Rs 1,000 from Rs 490. The firm said that there has already been significant improvement in valuation, although it has a ‘Neutral’ rating on the stock.
The revised target price is 8.85% above Paytm’s previous close of Rs 918.65 on November 28. This new target is double UBS’s earlier estimate of Rs 490 per share.
UBS noted that future growth for Paytm should now be revenue-driven, as most cost optimization efforts have already been implemented. The firm expects Paytm’s FY26 revenue to be in line with FY24 levels, and adjusted EBITDA forecast to break even by Q4FY25.
The report also highlighted that Paytm’s stock re-rating has accelerated after regulatory challenges were resolved.
At the start of the year, Paytm faced several regulatory hurdles, particularly in data protection and risk management. In January, the Reserve Bank of India (RBI) had imposed restrictions on Paytm Payments Bank (PPBL) for deficiencies in these areas. The RBI had flagged issues with the bank’s risk management processes and adherence to data protection regulations, leading to increased scrutiny.
Bernstein reiterates positive outlook for Paytm.
Last week, global brokerage firm Bernstein reiterated its positive outlook for Paytm, raising its target price to Rs 1,000 per share from Rs 750. Bernstein maintained the ‘outperform’ rating, noting that the focus on Paytm has shifted from survival concerns to analysis of both bullish and bearish scenarios.
In terms of upside, Bernstein estimates that Paytm will benefit from lending, partially leveraging its balance sheet, as well as improving payment margins. This could potentially lead to a 100% increase in its base case earnings per share (EPS) estimate. On the downside, Bernstein sees disbursement margins coming under pressure, and slower growth in loan disbursements, which could result in a 40% reduction in his base-case EPS estimate.
Earlier this week, Paytm shares touched a 52-week high of Rs 939 after it announced the launch of an automatic top-up feature for its UPI LITE service, a PIN-less lane for payments below Rs 500. Enables religion. This feature is available to select. Yes Bank and Axis Bank customers, UPI LITE automatically recharges when the balance falls below a specified threshold.
Paytm UPI LITE Service
The UPI LITE service allows daily transactions of up to Rs 2,000, covering small-value payments such as groceries, transportation, and daily purchases. Users can top up their UPI LITE balance directly from linked bank accounts, ensuring a seamless and hassle-free experience.
Additionally, Paytm introduced the UPI Statement Download feature, allowing users to separately track transactions made through UPI LITE. These transactions are processed through an on-device wallet, avoiding the need for direct access to bank accounts, keeping bank statements streamlined.
Paytm’s UPI service works in collaboration with major Indian banks, including State Bank of India, HDFC Bank, Axis Bank, and Yes Bank. The platform has also expanded internationally, enabling UPI payments in several countries such as the UAE, Singapore, France, Mauritius, Bhutan, Sri Lanka and Nepal.
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