Paytm shares rally 38% in less than two months; stock may surge by another 40% in near term, says expert-Here is why!

After the recent recovery in stock price, shares of One 97 Communications (Paytm) can surge up to 40% in the near term, as per the expert.  Shares of the online solutions provider firm have already jumped nearly 38% from its 52-week low of Rs 511 per share recorded on May 12 last month.  

From its record high of Rs 1,961.05, the counter is still available at around 64% discount, while the stock is trading lower by 67% on its issue price of Rs 2150.  

The expert is of the view that the recent breakout can result in two immediate targets of Rs 870 and Rs 990.  

As per Santosh Meena, Head of Research, Swastika Investmart Ltd, the counter is bottoming out after building a strong base at the 500 level.  

It is now witnessing a breakout of symmetrical triangle formation with strong positive divergence in RSI, the expert said.  

"It manages to close above its all-important moving averages where we can expect immediate targets of Rs 870/990," said Meena.  

On the downside, Rs 650 should act as an immediate and strong support level, the expert added.  

Earlier in mid-June, global brokerage firm CITI has initiated coverage on Paytm with a buy rating for target price of Rs 915.  

"The stock has declined materially from its IPO price of Rs2,150/sh, partly in line with fintech sector de-rating in the last six months, compounded by concerns on profitability in the core payments business and regulatory headwinds in India. At CMP, we think valuations are attractive and are pricing in most of the downside risks," the brokerage had said while initiating coverage.  

Earlier, Shares of One97 Communications Ltd, Paytm's parent company, had made a tepid debut on the exchanges at Rs 1,955 per share, a discount of over 9 per cent from the issue price of Rs 2,150.