The parent company of Paytm, One97 Communications Ltd., has seen a significant surge in its share value, currently trading at ₹727.55 on the Bombay Stock Exchange (BSE). This rise follows a favorable report from Dolat Capital, which has positively influenced investor sentiment and overall market performance.
- Share Price Surge: Paytm shares recently surged over 7%, reaching ₹736.70 earlier in the trading day, showcasing strong market interest following the brokerage’s upbeat outlook.
- Brokerage Upgrade: Dolat Capital has revised its target price for Paytm shares from ₹700 to ₹920 and maintains a ‘buy’ rating, emphasizing anticipated revenue growth and improved financial conditions.
- Market Resilience: In the latest trading session, Paytm shares demonstrated resilience despite facing prior financial hurdles, including reported losses in recent quarters. The company’s current market capitalization is around ₹42,757.79 crore.
Dolat Capital’s analysis outlines a variety of promising developments that have driven up Paytm’s market performance:
- Regulatory Milestones: The approval of foreign direct investment (FDI) for Paytm’s Payment Aggregator license has removed significant growth barriers. This regulatory advancement is expected to enhance operational capabilities and broaden market outreach.
- Business Expansion: Paytm’s successful transitions, including effective migration strategies and an expanding partner network in financial distribution, serve as indicators of improving business health, bolstering its competitive stance in the digital payments sector.
- User Engagement Growth: With over 78 million monthly transacting users (MTUs) and 150 million annual transacting users (ATUs), Paytm’s extensive user base is critical for fostering revenue growth as digital payment adoption accelerates in India.
Dolat Capital forecasts a compound annual growth rate (CAGR) of 28% for Paytm’s revenue from FY25 to FY30, tapering to 18% CAGR from FY30 to FY40. The brokerage predicts that Paytm will achieve profitability by FY26, anticipating a stable EBIT margin of around 16.1% from FY31 to FY40.
The Report Also Highlights:
- Adjusted EBITDA Breakeven: Analysts expect Paytm to reach adjusted EBITDA breakeven by the fourth quarter of FY25, excluding UPI incentives.
- Profit After Tax (PAT): Profitability is projected to commence in FY26 as enhancements in operational efficiency and diversification of revenue streams take effect.
Investor sentiment has considerably improved since the release of Dolat Capital’s report, igniting renewed interest in Paytm shares. Despite facing previous volatility, including a reported loss of ₹840 crore for the quarter ending June 30, 2024, which marked an increase from ₹358.4 crore in the same quarter last year, the stock has shown resilience.
From a technical standpoint, recent movements in Paytm shares have been noteworthy:
- Price Trends: Over the past month, the shares have appreciated by roughly 19.69%, and over the past three months, they have surged nearly 72.79%.
- Resistance and Support Levels: Current resistance levels are set at ₹669.30 and ₹687.05, with support levels hovering around ₹675.85.
