Vinit Bolinjkar, Head of Research at Ventura Securities, said One 97 Communications Ltd (Paytm's parent) shares are a very good play at the current market price and they can close to double from here. "Most of the headwinds around the stock have kind of disappeared. We think that Paytm can close to double from current levels. So, Paytm is good for an upside target of Rs 1,200-1,250 over the next 24 months," the market expert told Business Today TV on Tuesday.
When asked about the reasons behind Paytm's potential upside, he said the digital payments firm has a good ecosystem of merchants. "It offers a lot of services to merchants, collecting a lot of commissions. It also does lending to merchants. And, the company has a number of other services which are all growing at above 30 per cent. Operating profitability was established in 2023. This year, because of the RBI strictures, it had to take a brief hiatus and re-work its model. In Q4 (FY25), it will come back to profitability and have net profit in FY27," Bolinjkar stated.
The market specialist also mentioned that Paytm's ecosystem is only growing and nobody else has been able to crack and build an ecosystem like the company has done in the short time it has been around.
For the unversed, the digital payments company sold its entertainment ticketing business to online food aggregator Zomato for Rs 2,048 crore in August this year.
The fintech firm has been under tremendous pressure since Reserve Bank of India (RBI) announced restrictions on Paytm Payments Bank's operations last year amid persistent non-compliance and continued material supervisory concerns.
With that being said, Paytm founder and CEO Vijay Shekhar Sharma has reaffirmed the company's commitment to reapplying for a payment aggregator (PA) licence from the Reserve Bank. "We will apply for the payment aggregator licence to the RBI in due course," Sharma said. The development surfaced when Paytm Payments Services Ltd (PPSL), a subsidiary of Paytm, secured approval from the government to invest further in its payment services business.
Last checked, Paytm shares were trading 3.40 per cent higher at Rs 711.70. At this price, the stock has rallied 75.27 per cent in six months. Despite the mentioned rise, it has declined 18.81 per cent in a year.
The counter traded higher than the 5-day, 10-, 20-, 30-, 50-, 100-, 150-day and 200-day simple moving averages (SMAs). The scrip's 14-day relative strength index (RSI) came at 66.08. A level below 30 is defined as oversold while a value above 70 is considered overbought.
As per BSE, the company's stock has a negative price-to-equity (P/E) ratio of 22.24 against a price-to-book (P/B) value of 3.55. Earnings per share (EPS) stood at (-)30.95 with a return on equity (RoE) of (-)15.95. Promoters held a 37.90 per cent stake in Paytm as of June 2024.