Paytm share price jumped over 7% on Thursday after brokerage firm Emkay Global Financial Services upgraded its rating on the stock to ‘Buy’ from ‘Add’ earlier. Emkay Global also increased Paytm share price target to ₹1,050 from ₹750 earlier.
Emkay’s revised target price for Paytm shares implies an upside potential of 23% from Wednesday’s closing price. The brokerage firm upgraded its earnings estimates over FY26-31E by 20-40% factoring in better revenue trajectory and cost optimization measures
Anand Dama, Senior Research Analyst at Emkay Global Financial Services believes that recent correction in Paytm stock price offers an attractive entry point given the reasonable valuations.
The brokerage is of the view that the recent NPCI approval released a major regulatory overhang for One 97 Communications, the parent company of Paytm. This should help it rebuild the MTU (Monthly Transacting Users) base in the next 12-18 months and thus cross-sell retail financial products like loans (for eg: Home Loans), insurance, and wealth products, thereby improving revenue per user.
“This, coupled with continued strong traction in merchant device subscription revenue, rising share of UPI on CC with MDR, accelerating merchant loan business with a better take rate, continued cost optimization, and rising non-operational income (including treasury income on proceeds from recent stake sale in the entertainment business/ PayPay Corp) should put Paytm on the early path to profitability by FY26E, with acceleration thereafter,” Dama said in a note.
After the stake sale in PayPay Corp, Paytm’s Cash/MCap stands at 21% as against 5% for Zomato, which Emkay analyst believe, provides strong margin of safety and can be used to accelerate business organically or inorganically or even reward shareholders via dividend or buy-back.
Additionally, further easing of regulatory stance via potential approval for payment aggregator license could be a positive catalyst, Dama said.
Paytm share price has fallen 10% in one month, but the stock has risen 26% in three months. Paytm stock price has surged nearly 100% in six months, delivering multibagger returns within a short span. In the past one year, Paytm shares have gained 22%.
Paytm shares hit a 52-week high of ₹1,063.00 apiece on December 17, 2024, and touched a 52-week low of ₹310 apiece on May 09, 2024, on the BSE.
At 9:50 AM, Paytm shares were trading 6.08% higher at ₹910.40 apiece on the BSE, commanding a market capitalisation of more than ₹57,875 crore.
Disclaimer: The views and recommendations made above are those of individual analysts or broking companies, and not of Mint. We advise investors to check with certified experts before making any investment decisions.
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