Shares of Paytm have been in an uptrend since the announcement of its results for the quarter ended December 2022. The stock jumped 5 per cent to hit a day's high of Rs 710.30 on BSE, continuing its upward journey for the fourth straight session.
Notably, Paytm hit EBITDA level profitability of Rs 31 crore in the December quarter. The company continues to be a loss-making business at a consolidated level. However, Paytm's consolidated loss narrowed by nearly 50 per cent to Rs 392 crore in the quarter ended December 31, 2022, as against a loss of Rs 778.5 crore in the year-ago period.
Also read: Decoding Paytm’s profitable quarter: 3 things that took the fintech to EBITDA profitability
Paytm also announced that its merchant payment volumes (GMV) for January stood at Rs 1.2 lakh crore or $15 billion, up 44 per cent YoY. The company said it saw continued scale in its loan distribution business with disbursements of Rs 3,928 crore or $480 million, up 327 per cent. Also, it disbursed 3.9 million loans in January, up 103 per cent.
Shares of new-age tech companies have been in the focus lately as they have corrected significantly from their recent highs. Paytm stock is also down over 30 per cent from its 52-week high of Rs 969, hit on February 10, 2022. However, it has recovered over 54 per cent from its 52-week low of Rs 439.60, hit on November 24, 2022.
What's driving the rally?
The stock ended 15 per cent higher on Wednesday after Macquarie doubled-upgraded the Paytm stock to 'Outperform' from 'Underperform' and raised its target price to Rs 800 from Rs 450. "Since our last target price cut, Paytm has positively surprised on the distribution of financial services revenue by a wide margin and has also managed to control overall expenses and charges," it said.
However, it also believes a lot more needs to be done on corporate governance by getting an independent non-executive chairman, more independent members on the board, etc.
In March 2022, this global financial major slashed its price target for the digital major Paytm citing regulatory headwinds including a falling probability of getting a banking licence. It initiated coverage on the stock in November 2021 with a target price of Rs 1,200, which was cut to Rs 700 and then further slashed to Rs 450.
Also read: Macquarie slashes Paytm price target to Rs 450
Goldman Sachs upped its target price for Paytm to Rs 1,150 from Rs 1,120 on the back of significantly stronger Q3 FY23 (December 2022) quarter results. "Paytm's current share price continues to offer a compelling entry point into India's largest and one of the most profitable fintech platforms," it said.
It believes Paytm's revenue growth could accelerate to 47 per cent YoY in Q4 FY23 on account of around Rs 130 crore in UPI incentives.
What do the technical charts suggest?
According to Osho Krishan, Sr. Analyst - Technical & Derivative Research, Angel One Ltd, Paytm has made its first attempt to test the 200 SMA post the strong surge but failed to surpass the same convincingly. At present, it is hovering near the sloping trend line of the recent two swing highs and until it surpasses the 650-660 zone, timidity is likely to continue in the counter.
"As far as levels are concerned, 570-550 is likely to provide a cushion to any blip, followed by the strong support of 520. On the higher end, 650-660 is likely to act as immediate resistance, followed by the immediate swing high of 720 levels in a comparable period," Krishan added.
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