Paytm Hits an Upper Circuit: One 97 Communications Ltd, the parent company of Paym, hit an upper circuit on BSE on Monday (March 18, 2024) after domestic brokerage firm YES Securities upgraded the company to 'buy' for the first time since it has started covering the stock. 

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The Paytm stock that began the trading session at Rs 377.30 on Monday after the previous close of Rs 370.90 raced to hit an upper circuit of Rs 389.40, a 4.99 per cent rise of Rs 18.50. 

It ended at the same price on Monday.  

What does Yes Securities says about Paytm?

YES Securities said that Paytm's dependence on the Wallet business for revenue had already declined materially to only about one-sixth of payments revenue.

The brokerage also upgraded after the NPCI approved OCL's application to participate in UPI as a third-party application provider among other factors.

Yes Securities' rating and target for Paytm 

It has upgraded the company to 'buy' from 'neutral' with a revised price target of Rs 505.

"We value OCL at 2.7x FY25E P/S for an FY28-31E EPS CAGR of 78%. We have not assumed any rehabilitation of OCL’s Wallet business in our assumptions. We have also assumed a relatively constrained outlook for the loan distribution business. We believe that the market is currently pricing in an even more acute scenario for OCL, which will not transpire, in our view," said Yes Securities in its report.

NPCI grants permit

Earlier, the National Payments Corporation of India had granted approval to One97 Communications Limited (OCL) to participate in UPI as a third-party application provider (TPAP) under the multi-bank model. 

The NPCI said that four banks (Axis Bank, HDFC Bank, State Bank of India, YES Bank) should act as PSP (Payment System Provider) banks to OCL. 

The national body had said that YES Bank should also be acting as merchant acquiring bank for existing and new UPI merchants for OCL.