Paytm Continues its Momentum, Surges Nearly 5%; Yes Securities Predicts 23% Upside

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One 97 Communications, the parent company of Paytm, saw its share price continue its upward trajectory on March 19, surging nearly 5 percent. Over the course of three days, the stock has witnessed a remarkable gain of 14 percent.

This surge follows an upgrade by Yes Securities, which raised its rating on the payments company stock from "neutral" to "buy" and increased the target price to Rs 505 from Rs 350.

The renewed optimism surrounding Paytm stems from NPCI's approval allowing the company to participate in UPI as a third-party application provider (TPAP), thereby enhancing its ability to facilitate payments.

Yes Securities attributes the rating upgrade to Paytm's decreasing reliance on the wallet business for revenue, minimized client loss due to reputational damage, increasing partner additions, and the competitive nature of the company. Past successes highlight Paytm's competitive edge as an organization, according to Yes Securities. Moreover, after receiving feedback from regulators and undergoing a de-risking process, the brokerage anticipates a more stable future for Paytm.

The brokerage values Paytm at 2.7 times FY25E P/S for an FY28-31E EPS CAGR of 78 percent. However, it refrains from factoring in any potential recovery of OCL's Wallet business in its assumptions and maintains a conservative outlook for the loan distribution business.

Despite the challenges faced in the past with regulators, Yes Securities believes that most of the negative impacts are already reflected in the price, signaling potential upside. Nevertheless, analysts caution that the discontinuation of the wallets business may affect Paytm's revenues in the short term, and the stalled loan distribution also poses a growth challenge.




At 11:35 am, Paytm was trading at Rs 408.45 on the National Stock Exchange (NSE), marking a 4.95 percent increase from the previous session. While the stock has rallied 14 percent in the past month, it remains down by 36 percent year-to-date.

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