Home / Markets / Stock Markets /  Paytm shares rally for third straight trading day. What's driving the stock?

Shares of One 97 Communications Ltd (Paytm) surged more than 6% to 624 apiece on the BSE in Wednesday's opening deals after the company shared its business update for the month of January 2023 during which its merchant payment volumes (GMV) stood at 1.2 lakh crore, growth of 44% year-on-year (YoY). It disbursed 3,928 crore worth of loans for the month of January 2023.

The stock rose for the third straight day after the fintech company posted its first-ever quarterly operating profit as a listed firm and the company's losses also narrowed during the third quarter of the current fiscal (Q3FY23). Further, major global brokerages have raised target price on the stock after Paytm's healthy Q3 numbers.

Paytm's net loss in the quarter through December narrowed to 392 crore as compared to 779 crore a year earlier whereas the leading digital payments brand's revenue from operations rose 42% to 2,062 crore.

Brokerages such as Citi, CLSA, and Goldman Sachs have recommended Buy rating while increasing target prices, while BofA has maintained its 'neutral' rating on the stock post Q3 results.

“I am very happy to share that our company has achieved this milestone of EBITDA before ESOP cost profitability in the December 2022 quarter itself. This is three quarters ahead of our guidance.. With our focus on growth and keeping a tight vigil on operational risk and compliances, I am very confident that we will soon achieve our next milestone of becoming a free cash flow generating company," said founder and Chief Executive Officer (CEO) Vijay Shekhar Sharma in a statement.

The company in its business update on Wednesday that its focus over the past few quarters continues to be on payment volumes that generate profitability for us, either through net payments margin or from direct upsell potential. With a focus on creating additional payment monetization, its number of merchants paying subscription for payment devices has reached 6.1 million, an increase of 0.3 Mn in January.

The stock has also been surging on the back of reports that suggest that India to ban a further 232 apps and websites, which includes Paytm's rivals like Naspers Ltd.-backed PayU’s LazyPay, as per a Bloomberg report.

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