Paytm stock rises 3% as JP Morgan sees 62% upside in a year

Shares of Paytm (listed as One97 Communications) rose over 3 per cent today as US financial services firm JP Morgan reinstated overweight rating despite a 71 per cent fall in the stock from its IPO price.  The brokerage has cut target price of Paytm to Rs 1,000 from Rs 1,200 earlier. However, the fresh target price is still 62 per cent higher than the market price.

Paytm stock touched an intraday high of Rs 639, rising 3.5 per cent against the previous close of Rs 617.40 on BSE.

The large cap stock is trading higher than 20-day and 50-day moving averages but lower than 5-day, 100-day and 200-day moving averages.

However, the stock has lost 52.85 per cent in 2022 but risen 10.81 per cent in a month. Market cap of Paytm stood at Rs 40,848 crore on BSE.

Total 0.96 lakh shares of the firm changed hands amounting to a turnover of Rs 6.01 crore. The stock hit a 52-week high of Rs 1961.05 on November 18, 2021 and a 52-week low of Rs 511 on May 12, 2022.

JP Morgan in a report said, "We believe a sustained improvement in the profit margin contribution at Paytm seen over the last two quarters sets the stage for operating leverage Q2F23 onwards as indirect costs moderate - resulting in a consistent downtrend in Adjusted EBITDA loss and an eventual path to breakeven."

"Lending business scale up, an increased contribution from devices and credit card sourcing should result in consistent quarterly improvement in contribution profits which should touch near 40 per cent by Q4 of the current fiscal," the report further added.  

After taking into account today's rally, shares of Paytm are down 67 per cent from the listing price of Rs 1,950 on BSE.

The stock listed at Rs 1,950 November 18, 2021, a 9.30 per cent discount to the issue price, marking debut of the country's biggest initial public offering (IPO) that time. The share opened at Rs 1,950 on NSE.

The IPO was open for subscription from November 8 to November 10.

Price band of the IPO was fixed at Rs 2,080-Rs 2,150 per share. The share made its debut at Rs 1,955 on BSE.

Meanwhile, the Vijay Shekhar Sharma-led firm reported a loss of Rs 763 crore for the quarter ended March 31, 2022 against a loss of Rs 778.5 crore in the December quarter and Rs 444 crore in the year-ago period.

However, revenue from operations zoomed 89 per cent year-on-year (YoY) to Rs 1,540.9 crore in Q4 as compared with Rs 815.3 crore in the corresponding quarter last year.