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Shares of Paytm, operated by One97 Communications, saw strong demand on Thursday; Check latest target price
Paytm Share Price Today
Shares of Paytm, operated by One97 Communications, saw strong demand on Thursday, November 28, 2024. The stock surged by up to 2.60% hitting a fresh 52-week high of Rs 942.55 per share.
The rally followed an update from UBS, a New York-based financial services firm, which raised its target price for Paytm to Rs 1,000 from Rs 490. The firm cited that significant improvements have already been factored into the valuation, though it maintained a ‘Neutral’ rating on the stock.
The revised target price implies an 8.85% upside from Paytm’s previous closing price of Rs 918.65 on November 28. This new target is more than double UBS’s earlier estimate of Rs 490 per share.
UBS noted that future growth for Paytm must now be driven by revenue, as most cost optimization efforts have already been implemented. The firm expects Paytm’s FY26 revenue to align with FY24 levels, and forecasts that adjusted EBITDA will break even by Q4FY25.
The report also highlighted that Paytm’s stock has experienced a sharp re-rating following the resolution of regulatory challenges.
At the start of the year, Paytm faced several regulatory hurdles, particularly in data protection and risk management. In January, the Reserve Bank of India (RBI) imposed restrictions on Paytm Payments Bank (PPBL) due to deficiencies in these areas. The RBI had flagged issues with the bank’s risk management processes and its adherence to data protection regulations, resulting in increased scrutiny.
Bernstein Reiterates Positive Outlook For Paytm
Last week, global brokerage firm Bernstein reiterated its positive outlook for Paytm, raising its target price from Rs 750 to Rs 1,000 per share. Bernstein maintained an ‘Outperform’ rating, noting that the focus on Paytm has shifted from survival concerns to an analysis of both bullish and bearish scenarios.
In the bullish case, Bernstein anticipates that Paytm will benefit from lending, partly using its own balance sheet, as well as improvements in payment margins. This could potentially lead to a ~100% upside in its base case earnings per share (EPS) estimates. On the bearish side, Bernstein sees payment margins coming under pressure, and slower loan disbursal growth, which could result in a 40% downside to their base case EPS estimates.
Earlier this week, Paytm shares hit a 52-week high of Rs 939 after announcing the launch of an automatic top-up feature for its UPI LITE service, which enables PIN-less transactions for payments under Rs 500. The feature, available to select Yes Bank and Axis Bank users, automatically recharges the UPI LITE balance when it falls below a set limit.
Paytm UPI LITE service
The UPI LITE service allows for daily transactions of up to Rs 2,000, catering to small-value payments such as groceries, transportation, and daily purchases. Users can top up their UPI LITE balance directly from linked bank accounts, ensuring a seamless and clutter-free experience.
Additionally, Paytm introduced a UPI statement download feature, allowing users to track transactions made via UPI LITE separately. These transactions are processed through an on-device wallet, avoiding the need to access bank accounts directly, keeping bank statements streamlined.
Paytm’s UPI service operates in collaboration with major Indian banks, including State Bank of India, HDFC Bank, Axis Bank, and Yes Bank. The platform has also expanded internationally, enabling UPI payments in several countries such as the UAE, Singapore, France, Mauritius, Bhutan, Sri Lanka, and Nepal.
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