Paytm shares rally 8%, Emkay upgrades stock to buy rating at Rs 1,050 target price
Shares of One97 Communications, parent company of mobile payment application Paytm, climbed as much as 8% on Thursday to Rs 926.95 on the BSE. The rally in the stock price followed brokerage firm Emkay Global upgrading the stock to 'buy' from its earlier rating of 'add', at a target price of Rs 1,050, which implies a potential upside of over 13% from the stock’s current levels.
The brokerage increased its target price on Paytm by 40% to Rs 1,050 from Rs 750 earlier. However, this revised target price remains well below Paytm's recent peak of Rs 1,062.95 reached on December 17 last year. Despite a recent decline of nearly 20% from those levels, Emkay sees the current valuation as attractive for investors.
Emkay highlighted that regulatory concerns for the company have eased with recent NPCI approval, which is expected to support Paytm in rebuilding its Monthly Transacting Users (MTU) base over the next 12 to 18 months. This strategic advantage could facilitate cross-selling opportunities in retail financial products like loans, insurance, and wealth management, thereby enhancing revenue per user.
The brokerage also noted Paytm's path toward profitability, projected by fiscal year 2026, with potential for further growth thereafter. Emkay said that Paytm's Cash-to-Market Cap ratio stands at 21%, providing a robust margin of safety compared to peers like Zomato.
Looking ahead, Emkay said it anticipates potential positive catalysts such as further regulatory approvals for payment aggregator licenses. The brokerage
