Shares of Paytm (listed as One97 Communications) hit a fresh 52 week high amid a rally in the broader market today. Paytm stock rose 2.89% to a high of Rs 977 against the previous closing price of Rs 949.50 on BSE. Market cap of Paytm rose to Rs 61,476 crore on BSE. Total 1.32 lakh shares of the firm changed hands amounting to a turnover of Rs 12.66 crore. The stock fell to a 52-week low of Rs 439.60 on November 24, 2022.
The stock has risen 37 per cent in a year and gained 82.26 per cent in 2023.
In terms of technicals, the relative strength index (RSI) of Paytm stands at 66, signaling it's neither trading in the overbought nor in the oversold territory. The stock has a beta of 1, indicating average volatility in a year. Shares of Paytm are trading higher than the 5 day, 20 day, 50 day, 100 day and 200 day moving averages.
Financial services firm Motilal Oswal said Paytm's operating profitability is likely to rise, led by an improvement in contribution margin & operating leverage in the September 2023 quarter . The company is likely to report a healthy growth in revenue in Q2. It has assigned a buy rating on the stock with a target price of Rs 1,000 and will review it after Q2 earnings.
The domestic brokerage firm sees 2QFY24 GMV to climb 46 per cent on a year-on-year (YoY) basis, while the value of loans disbursed are seen rising 135 per cent YoY and 16 per cent QoQ to Rs 17,200 crore.
"We expect revenue from operations to grow 36 per cent YoY to Rs 2,600 crore, while contribution profit is estimated to grow 72 per cent YoY to Rs 14,500 crore," said Motilal Oswal.
Brokerage firm Bernstein said Paytm does appear to be on the right side of disruption with its dominant payments platform and a head start in digital credit products even as it is too early to declare winners in the digital lending space especially with the expected entry of Jio Financial Services.
"Its underwriting and collection outcomes are impressive too, but remain untested through a full credit cycle. We expect Paytm to continue its strong growth in the lending business. Simultaneously, a rise in payments volume will ensure that the business turns profitable in FY25E and achieves an EPS of Rs 130 by FY30E," added Bernstein.
Bernstein has a target price of Rs 1,100 for the stock.
YES Securities has an ‘add’ rating for the stock but has raised the target to Rs 1,025
The brokerage expects Paytm to achieve robust sequential revenue growth due to consistent loan disbursements and the addition of new devices. It sees a 14 percent QoQ increase in revenue from operations. It expects total expenses (excluding payment processing charges) to rise by 7 percent QoQ, a fall from the 11 percent growth in the previous quarter. Subsequently, the EBITDA margin (excluding other income and after ESOP cost) is expected to improve by 591 basis points QoQ.
Disclaimer: Business Today provides stock market news for informational purposes only and should not be construed as investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
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Also read: Paytm Q2 preview: Brokerages bullish on One97 Communications ahead of results