Brokerage sees Paytm shares soaring by Rs 500 citing several levers

The global brokerages’ tone for Paytm – a digital financial services company – has been positive lately, mainly due to a better growth outlook.

Amid this, Citi on Monday expects that Paytm owner One97 Communications shares may give nearly double returns, going forward.

The brokerage maintained a ‘buy’ target on the stock with a target price of Rs 1,061 per share, which implies Rs 500 or 82 per cent upside from Monday’s closing.

Paytm’s market share has been stable in February 2023, and it has several existing and emerging levers, Citi said in its commentary.

The brokerage added that the stock is trading at attractive valuations at the current market price.

The stock on Tuesday bucked the market’s negative trend to trade in the green, it surged as much as 597.50 apiece, up around 3 per cent on the BSE from the previous day’s close of Rs 581 per share.

Earlier in February, another brokerage firm Goldman Sachs also expected that the stock is likely to double. It had a 'buy' call on Paytm with a target of Rs 1,150 apiece.

Similarly, Macquarie had a change of heart on Paytm in February as it made a complete U-turn on the counter.

It gave a double upgrade to ‘outperform’ from an ‘underperform’ rating on Paytm with an increased target price of Rs 800 from Rs 450 per share earlier in February.

The brokerage since its listing in November 2021 had a bearish stance on the stock.

One-97 Communications in its December quarter results on February 3, 2023, reported a quarterly net loss that was nearly half compared with the corresponding period a year ago.

According to a regulatory filing, the company’s net loss came in at Rs 392 crore for the third quarter of the current financial year, as against a loss of Rs 778.4 crore for the same quarter a year ago.

Besides, Paytm Founder and CEO Vijay Shekhar Sharma in Q3 results commentary said that the company had achieved its target for operational profit excluding ESOP cost.

Paytm shares made a market debut in November 2021 at Rs 1,950 apiece, a 9.3 per cent discount to its issue price of Rs 2150 per share.

The stock has declined more than 14 per cent in the last one year, in which the Nifty50 has risen around 1 per cent.

Anil Singhvi's take on Paytm shares

Zee Business Managing Editor Anil Singhvi suggested existing investors should continue to hold Paytm shares in their portfolio. "Those entering the stock now are coming at the right valuation," he said.  

Earlier, Singhvi had said that those owning stocks of new-age companies such as Paytm should avoid selling their holdings at "just about any price".

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