Paytm Stock Hits 5% Upper Circuit for Second Day: What’s Driving the Rally?

Paytm shares jumped 5% for the second day in a row on May 30, following a report that billionaire Gautam Adani might buy a stake in One97 Communications, Paytm’s parent company. However, Paytm quickly clarified that the news was just a rumor.

Paytm stated, “The news is speculative, and we are not in any discussions about this. We always follow SEBI regulations for making necessary disclosures.”

Adani Group also denied the rumors, calling them “baseless and untrue.”

Earlier this year, the RBI imposed restrictions on Paytm Payments Bank (PPBL) due to repeated violations and non-compliance with rules. The RBI stopped PPBL from accepting new deposits and doing credit transactions after February 29, leading Paytm’s stock to fall to a 52-week low of Rs 310 on May 9.

The speculation about Adani’s partnership comes at a crucial time for Paytm, which reported poor results for the quarter ending in March 2024. Paytm’s net loss widened to Rs 550 crore in Q4FY24, a 3.2 times increase from Q4FY23, as margins suffered after RBI’s ban. Its revenue from operations dropped 2.9% year-on-year to Rs 2,267 crore.

Currently, founder Vijay Shekhar Sharma holds nearly 19% of Paytm, valued at Rs 4,218 crore at the previous session’s closing price of Rs 342. Sharma owns 9% directly and 10% indirectly through Resilient Asset Management.

At 2:23 pm, Paytm shares were trading 5% higher at Rs 377.40 on the NSE, raising the fintech firm’s market cap to Rs 24,001 crore. YES Securities recently revised its price target for Paytm to Rs 450, valuing the company at 2.8 times its FY26 price to sales.

Dolat Capital predicts Paytm’s stock will recover and rise to Rs 650. “Paytm’s focus on business growth and cost efficiency is promising. We believe the current price does not reflect a potential sharper recovery from Q2 onwards, so we maintain a ‘Buy’ rating with a DCF-based price target of Rs 650,” the brokerage said.