Paytm Share Price Surge to 565: What Investors Should Know About Recent Developments”
On August 29, 2024, shares of One 97 Communications Ltd (Paytm) rose by 5% in Thursday’s trading session after receiving approval for downstream investment in its wholly-owned subsidiary, Paytm Payments Services Ltd (PPSL). This approval, granted by the Government of India’s Ministry of Finance, is expected to boost investor confidence in the company’s future prospects.
Main Points
Paytm shares reached a high of Rs 565 on the Bombay Stock Exchange (BSE) following the news of the investment approval. They later traded at Rs 545.50, reflecting a 1.38% increase. The company stated that PPSL will continue to offer online payment aggregation services to its existing partners.The recent drop in Paytm’s share price on August 26, 2024, was due to reports that the market regulator has issued showcause notices to Paytm founder Vijay Shekhar Sharma and its directors over initial public offering (IPO) breaches. The stock slumped 8.88% to hit a day low of Rs 505.25 before recovering slightly to trade 4.12% lower at Rs 532.
Analysts remain bullish on Paytm’s future growth prospects. Morgan Stanley has maintained an ‘Equal-Weight’ rating on the stock, setting a target price of Rs 500. The recent development is viewed as reducing regulatory concerns.Jefferies has kept a “Hold” rating with a target price of Rs 420, noting that if approved by the Reserve Bank of India (RBI), Paytm could onboard new online merchants. However, the immediate business impact might be marginal, according to Jefferies.
Ventura Securities has issued a research note suggesting that Paytm’s stock could more than double to Rs 1,170 over the next 24 months based on its base case assumptions. In its bullish case scenario, Ventura proposed a target price of Rs 1,444 per share, indicating a potential nearly three-fold increase in the stock price. Even under its bear case assumptions, Ventura values the stock at Rs 870.
Paytm Financial Outlook: Revenue and Profit Growth
Looking ahead to FY24-27, Ventura expects Paytm’s revenue to grow at a compound annual growth rate (CAGR) of 14.1% to Rs 14,531 crore. Contribution profit is forecasted to increase by 15.6% to Rs 8,301 crore, and pre-ESOP Ebitda is predicted to rise by 54.5% to Rs 1,829 crore.Additionally, Ventura projects that Paytm’s post-ESOP Ebitda and net earnings will become profitable by FY27, with estimates of Rs 1,379 crore and Rs 1,388 crore respectively, compared to losses of Rs 908 crore and Rs 1,417 crore in FY24.This growth is expected on the back of GMV (payment services + devices) increasing to Rs 32.1 lakh crore (21.9% CAGR), a more than four-fold rise in loan disbursals, and a doubling of revenues from marketing services. The Paytm Wallet, FASTag, BNPL, and house rental payments, which were discontinued, are anticipated to resume once the RBI’s restrictions are lifted.
From 1,776.35 to 1,800: What Next for Bajaj Finserv Share Price?
Paytm 52-Week High and Low
Paytm’s 52-week high is Rs 998.30, while the 52-week low is Rs 310.00. The stock has moved up by 57.15% in the last three months, indicating a positive trend.
Paytm Technical Analysis and Important Levels
On the technical front, immediate support on the counter could be seen in the Rs 490-480 zone. Paytm has recently experienced a series of higher highs, particularly after reaching a low point in May, and has maintained this trend until now. At present, Rs 490-480 is likely to cushion the trend, and a decisive breach could only disrupt the move. On the higher end, Rs 575-600 is the zone that is likely to provide resilience, and a continuation could be seen only after a decisive breakout.
Paytm’s Fundamental Analysis and Valuation
Paytm’s PE ratio stands at -18.26, while the PB ratio is 2.61. The company’s market capitalization is Rs 34,216.41 crore. Domestic Institutional Investors’ holding has gone up from 3.95% (30 Sep 2023) to 7.04% (30 Jun 2024), while Foreign Institutional Investors’ holding has gone down from 60.92% (30 Sep 2023) to 58.24% (30 Jun 2024).
