Paytm, the digital payments giant, has been making headlines as its share price continues to climb, driven by impressive business updates for the month of August. The stock has surged over 100% from its 52-week low, leaving investors wondering if now is the right time to buy.
One97 Communications Ltd., the parent company of Paytm, reported a remarkable 20% year-on-year growth in its average monthly transacting users, reaching an impressive 94 million users in the July-August period compared to 79 million in the same period last year. Additionally, Paytm disbursed loans totaling ₹5,517 crore (approximately $667 million) in August through its lending platform.
In another promising development, the company’s merchant payment volumes (GMV) experienced a significant 43% year-on-year increase, soaring to ₹3 trillion ($36.3 billion) in July-August 2023, up from ₹2.1 trillion in the same period the previous year. Paytm’s GMV growth was not limited to UPI instruments, as non-UPI methods like EMI and cards also witnessed substantial gains.
Paytm’s stock has been on a strong upward trajectory over the past six months, outperforming the Sensex by a substantial margin. With a 44% gain in the last six months compared to the Sensex’s 9% increase, the stock reached its 52-week high of ₹939 on August 25, 2023, bouncing back from its 52-week low of ₹439.60 on November 24, 2022.
Financial experts are optimistic about Paytm’s future potential. Motilal Oswal Financial Services has issued a buy recommendation on the stock, setting a target price of ₹1,000, suggesting a potential 13% upside. The brokerage firm emphasized Paytm’s robust business momentum, highlighting its strong GMV growth and loan disbursements, along with promising traction in subscription devices, all contributing to healthy revenue growth.
Global financial giant Citi is also bullish on Paytm, with a target price of ₹1,160. Citi noted Paytm’s leadership in devices and its sustainable advantages.
From a technical standpoint, the stock’s short-term prospects look favorable as well. Jigar S. Patel, Senior Manager of Equity Research at Anand Rathi Share and Stock Brokers, mentioned that Paytm has been showing positive momentum recently, trading near ₹900. Patel suggested that if the stock can maintain levels above ₹915 on a weekly scale, it could attract fresh buyers targeting ₹1,000, with a stop-loss set near ₹860 on a daily closing basis.
Gaurav Bissa, VP of InCred Equities, highlighted Paytm’s consistent uptrend, forming higher highs and higher lows on the weekly charts. Bissa advised investors to consider buying Paytm on declines towards ₹840-850, targeting ₹1,100, with a stop-loss at ₹780 for those who already hold the stock.
In the first quarter of the current financial year (Q1FY24), Paytm reported a consolidated net loss of ₹357 crore, a significant improvement compared to the ₹6,444 crore loss in the same period last year. Furthermore, the company’s revenue from operations surged by 39.4% to ₹2,341 crore in Q1FY24, compared to ₹1,679 crore in the year-ago period.
With strong business fundamentals, positive technical indicators, and the endorsement of leading financial experts, Paytm appears to be an attractive option for both short-term and long-term investors. However, as with any investment, it’s essential to conduct thorough research and consider your financial goals and risk tolerance before making a decision.
