Shares of one of the fastest-growing mobile payment applications, Paytm’s parent company, One97 Communications, rose up to 8 percent on Thursday to Rs 926.95 on the BSE. The appreciation in the stock price came a day after brokers Emkay Global assigned a ‘buy’ rating to the stock from an earlier ‘add’, with a target of Rs 1,050 valuing, which means the stock has scope for more than 13% appreciation from the current levels.
The brokerage added another 40% to its target price on Paytm to Rs 1,050 from the previous Rs 750. But this new target price is still below the recent high of Paytm’s stock at 1,062.95 reached on December 17 last year. From figures of 2 years earlier, its stock also decreased by nearly 20%, but on the same note, Emkay claims that the current price-to-earnings ratio could be quite reasonable.
Emkay noted that regulatory risks for the company have abated with the recent NPCI approval, after which Paytm will be able to gradually build back its MTU base over the next one and a half years.
This strategic advantage could help in cross-selling retail financial products such as loans, insurance, and wealth management, hence increasing revenue per user.
The brokerage also mentioned Paytm’s journey to positive margin, which is expected before FY26 and, if successful, will continue in the following years. According to Emkay, Paytm has a Cash & Near Cash/Market Cap ratio of 21%, which, in his opinion, gives the company a wide moat against ant other rivals, including Zomato.
In this regard, Emkay said it expects potential positive drivers, such as additional regulatory nods for payment aggregator licenses. It has raised EPS estimates for the brokerage for FY26-31 by 20-40% due to a better sales outlook and a reduction in operating expenses.
Currently Tilak Orange team has gathered data from 17 analysts, six of the analysts recommend the ‘’BUY’’ the Paytm stock, six ‘’Hold’’ and five analysts recommend a ’’SELL’’ on the Paytm stock.
Customer Base Expansion
Following recent approvals from the National Payments Corporation of India (NPCI), Paytm has begun recovering its lost monthly transacting users (MTU). The company aims to restore its MTU base to around 100 million within the next 12-18 months at a lower incremental acquisition cost.
This recovery is expected not only to enhance merchant acceptance but also to create opportunities for cross-selling various retail financial products such as home loans, insurance, and wealth management services.