Citi upgrades Paytm to 'buy'; sees 21% potential upside as regulatory risks appear largely behind

Shares of digital payments entity Paytm are in focus in Thursday's session (October 24, 2024) as the global brokerage Citi has upgraded the stock to a 'buy' from the earlier 'sell' call and more than doubled the target to Rs 900 as against the previous Rs 440. The set target implies a potential upside of 21 per cent from the stock's previous day's closing levels of Rs 745 apiece on the BSE.

The brokerage said that regulatory risks now appear largely behind.

The upgrade largely follows the approval of the National Payments Corporation of India (NPCI) for the Noida-based fintech firm to board new UPI users. The NPCI granted the go-ahead to the company after it addressed regulatory concerns raised by the apex bank earlier in the year. 

Following the development, the stock ended 8.5 per cent higher at Rs 745.1 per share.

Notably, in February, the Reserve Bank of India (RBI) directed Paytm to suspend new user registrations amid a violation of regulatory norms.

Additionally, Citi said that the company has announced plans to offer Default Loss Guaranteed (DLG), compliant with RBI norms, to its lending partners in the merchant loans distribution business. 

Paytm Q2 FY25 Results

Digital payments firm Paytm—owned by One97 Communications— reported a consolidated net profit of Rs 928.3 crore for the quarter ended September 30 due to a one-time exceptional gain. The company had logged net losses of Rs 838.9 crore and Rs 290.5 crore for the previous quarter and the July-September 2023 period, respectively.