Paytm share price rises 3% to hit a 52-week high; Bernstein initiates coverage on stock with an 'outperform' rating
Paytm (One 97 Communications) share price rose almost 3 per cent to hit its fresh 52-week high of ₹931 in morning trade on BSE on Thursday. The stock opened at ₹925.05 against the previous close of ₹905.60 and soon rose 2.80 per cent to hit its 52-week high of ₹931. However, the stock cooled off slightly and around 10:35 am, it was up 2.24 per cent at ₹925.85.
Shares of Paytm have seen strong gains in the last six months. They have surged nearly 49 per cent in the last six months while the equity barometer the Sensex has gained just about 11 per cent in the same period. Recently foreign brokerage firm Bernstein initiated coverage on Paytm with an 'outperform' rating, pegging the 12-month target price to ₹1,100.
"While it's too early to declare winners in the digital lending space, especially with the expected entry of Jio Financial Services, Paytm does appear to be on the right side of disruption with its dominant payments platform and a head start in digital credit products," Bernstein said. Bernstein expects Paytm to continue its strong growth in the lending business (nearly 50 per cent CAGR between FY23-30E). The brokerage firm expects Paytm's loan disbursal volumes to grow sharply and achieve a market share of nearly 4 per cent by FY26E in the high-yield household lending segment, with more than 13 per cent interest rate.
With stabilising margins in its payments segment, Bernstein expects the business to break even by FY25E and generate an EPS (earnings per share) of nearly ₹130 by FY30E. But Bernstein observed that the digital lending space is still evolving and any adverse regulatory changes will be a key downside risk for Paytm. Meanwhile, Paytm's consumer base expanded with an average monthly transacting user
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