Paytm’s stock price is in the spotlight after the company received approval to bring new users onto its UPI (Unified Payments Interface) platform. Paytm’s shares saw a rise on the BSE (Bombay Stock Exchange) after this announcement.
One 97 Communications, the parent company of Paytm, shared that the National Payments Corporation of India (NPCI) has granted them permission to add new UPI users, following NPCI’s guidelines and rules.
Earlier this year, Paytm Payments Bank Ltd (PPBL) faced restrictions from the Reserve Bank of India (RBI) on adding new UPI users through the Paytm app. The latest approval came after Vijay Shekhar Sharma, CEO of One 97 Communications, requested the NPCI to lift these restrictions on August 1.
This decision is expected to boost Paytm’s user growth, according to analysts. Anand Dama, Senior Research Analyst at Emkay Global Financial Services, said, “With NPCI’s approval, Paytm can now grow its user base again, which also shows that regulatory issues are easing.”
In addition to this news, Paytm also reported its financial results for the second quarter of FY25, where the company achieved profitability for the first time.
Paytm Q2 2024 Results
One 97 Communications reported a net profit of ₹930 crore in the September quarter. This profit was largely due to a one-time gain of ₹1,345 crore from selling its entertainment ticketing business.
The company saw an 11% rise in revenue compared to the previous quarter, driven by a 5% increase in GMV (Gross Merchandise Value), better returns from devices, and a 34% increase in revenue from financial services.
Paytm also reduced its EBITDA (before ESOP) loss to ₹1.8 billion from ₹5.5 billion in the previous quarter. This improvement was due to cost-cutting measures, lower employee stock option costs, and the one-time gain from the sale of the entertainment business. This allowed Paytm to report a profit of ₹9.3 billion for the first time.
Anand Dama also noted that Paytm’s ongoing cost-saving measures and business improvements should lead to early profitability, possibly by FY26 or FY27. He said that Paytm’s stock could further improve if the company quickly recovers its lost customer base, sees strong growth in its lending business, and avoids more regulatory hurdles.
The brokerage firm maintained an ‘Add’ rating for Paytm shares, with a target price of ₹750.
On Tuesday, Paytm shares closed 5.31% lower at ₹687.30 on the BSE.
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