Paytm Shares parent company, One97 Communications Ltd, experienced a notable rise in value, trading at ₹727.55 on the Bombay Stock Exchange (BSE). This increase follows a significant report from Dolat Capital, which has positively influenced investor sentiment and market performance.
Main Points
- Share Price Increase: Paytm shares jumped by over 7% to reach ₹736.70 earlier in the day, reflecting strong market interest following the brokerage’s optimistic outlook.
- Brokerage Upgrade: Dolat Capital raised its target price for Paytm shares from ₹700 to ₹920, maintaining a “buy” rating. This upgrade is based on projected revenue growth and improved business conditions.
- Market Context: As of the latest trading session, Paytm shares have shown resilience despite previous financial challenges, including reported losses in recent quarters. The current market cap stands at approximately ₹42,757.79 crore.
Dolat Capital’s report outlines several positive developments that have influenced Paytm’s stock performance:
- Regulatory Approvals: The approval of foreign direct investment (FDI) for Paytm’s Payment Aggregator license has removed significant barriers to growth. This regulatory clearance is expected to enhance operational capabilities and expand market reach.
- Business Developments: The successful migration of Paytm handles and an expanding partner network in financial distribution are key factors cited by Dolat as indicators of improving business health. These advancements are expected to bolster Paytm’s competitive position in the digital payments landscape.
- User Base Growth: Paytm boasts a substantial customer base with over 78 million monthly transacting users (MTUs) and 150 million annual transacting users (ATUs). This large user base is crucial for driving revenue growth as digital payment adoption continues to rise in India.
Dolat Capital projects a compound annual growth rate (CAGR) of 28% for Paytm’s revenue from FY25 to FY30, followed by an 18% CAGR from FY30 to FY40. The brokerage anticipates that Paytm will achieve profitability by FY26 with a steady 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 start in FY26 as operational efficiencies improve and revenue streams diversify.
Investors have reacted positively to Dolat Capital’s report, which has sparked renewed interest in Paytm shares. The stock has shown resilience despite previous volatility, including a reported loss of ₹840 crore for the quarter ending June 30, 2024. This loss was an increase from ₹358.4 crore during the same period last year.
From a technical perspective, Paytm shares have demonstrated significant movement over recent months:
- Price Trends: Over the past month, shares have increased by approximately 19.69%, while they have surged nearly 72.79% over three months.
- Resistance Levels: Current resistance levels are identified at ₹669.30 and ₹687.05, with support levels at approximately ₹675.85.
