Paytm shares jump 10% today; how strong is this upside?

Shares of One 97 Communications Ltd (Paytm's parent) on Monday witnessed a sharp uptick. The stock surged 9.87 per cent to hit a day high of Rs 479.70. It was last seen trading 8.44 per cent higher at Rs 473.40. Despite the mentioned rise, the scrip has slipped 26.73 per cent on a year-to-date (YTD) basis.

Today's rise in the share price came just a day after Paytm founder Vijay Shekhar Sharma expressed his desire to make the firm recognised globally and transform it into a $100 billion company. "I have a personal ambition to make (Paytm) a $100 billion Indian company," Sharma said during an event.

Sharma also acknowledged that Paytm learnt its lessons and could have handled responsibilities differently. "I believe we were getting matured, and going towards full profitability, making free cash, and so on. At a professional level, we should have done better and there is no secret about it. We had responsibilities and we should have fulfilled them much better. We learnt our lesson," Sharma stated.

Earlier this year, Reserve Bank of India (RBI) announced restrictions on Paytm Payments Bank's operations amid persistent non-compliance and continued material supervisory concerns.

On technical setup, the counter traded higher than the 5-day, 10-, 20-, 30-, 50-day and 100-day simple moving averages (SMAs) but lower than the 150-day and 200-day SMAs. The stock's 14-day relative strength index (RSI) came at 73.53. A level below 30 is defined as oversold while a value above 70 is considered overbought.

The company's stock has a negative price-to-equity (P/E) ratio of 19 against a price-to-book (P/B) value of 1.70. Earnings per share (EPS) stood at (-)17.54 with a return on equity of (-)8.97.

"Paytm's stock has given a breakout. The trend continues to show strength, keep trailing for next target of Rs 530," Vaishali Parekh, Vice-President - Technical Research at Prabhudas Lilladher, told Business Today.

"The stock has witnessed a decent pullback with significant volume participation. Expected near-term target will be Rs 525-530 levels where it can find resistance. Maintaining support near the Rs 450 zone, one can stay invested for further gains," said Shiju Koothupalakkal, Technical Research Analyst at Prabhudas Lilladher.

Around 13.73 lakh shares were last seen changing hands. The figure was higher than the two-week average volume of 3.23 lakh shares. Turnover on the counter came at Rs 63.80 crore, commanding a market capitalisation (m-cap) of Rs 30,104.71 crore.