Paytm’s shares expected to surpass Rs 500, says Motilal Oswal

Brokerage company Motilal Oswal Financial Services (MOSFL) is positive about the future of fintech business Paytm, in spite of difficulties being dealt with by its associate Paytm Payments Bank (PPBL).

It sees the business’s shares crossing the Rs 500 per share mark, highlighting current advancements and tactical collaborations as appealing indications.

Paytm got approval from the National Payments Council of India (NPCI) to run as a third-party app, comparable to rivals like Google Pay and PhonePe. In addition, Paytm formed collaborations with Axis Bank, HDFC Bank, SBI, and Yes Bank to assist in smooth organization migration, revealing proactive actions to resolve functional concerns.

Motilal Oswal preserves a neutral score on the stock with a target cost of Rs 530, recommending a possible advantage of 30%.

“Paytm has actually been under regulative examination for a long time, with its subsidiary PPBL getting several regulative cautions. This has actually resulted in the RBI enforcing extreme service limitations on PPBL. The constraints have actually put the business at threat of losing consumers and merchants, interrupting its development trajectory. In spite of this, business volumes in February reveal a moderate effect. We prepare for a more decrease in UPI deal volume/value information in Mar’ 24. We evaluate our numbers and approximate payment processing margin to decrease as the mix of high-yielding wallet organization decreases dramatically, while the influence on monetary company (loan origination volumes) even more reduces earnings development and success,” MOSFL stated in its newest report.

The business has actually been under regulative examination, leading to serious company limitations enforced by the Reserve Bank of India (RBI) on PPBL. The constraint raised issues about losing consumers and merchants, impacting its development. In spite of this, service volumes in February saw a moderate effect.

The decrease in UPI deal volume/value information is anticipated to continue into March 2024. Payment processing margin is most likely to reduce due to the decrease in high-yielding wallet organization and the effect on monetary organization.

After an enormous decrease in February, the stock has actually recuperated some losses and turned favorable for March. It had a 20% boost in January 2024.

Presently, the stock trades over 27% greater than its 52-week low of Rs 318.35 (February 16, 2024), however stays over 59% lower than its 52-week high of Rs 998.30 (October 20, 2023). Over the previous year, the stock has actually seen a decrease of over 34%.

Motilal Oswal highlighted Paytm’s capability to reduce service effect will depend upon execution abilities in the coming quarters. They are careful of the continuous organization shift and Paytm’ s prospective to gain back lost service and resume development.

The brokerage approximates a decrease in Paytm’s FY25E income and contribution revenue by 24% and 30%, respectively. They anticipate the contribution margin to sustain at 51% over FY25E (compared to 56 percent in FY24).