Brokerage firm Motilal Oswal Financial Services (MOSFL) remains bullish on the future outlook of fintech giant Paytm, forecasting its shares to exceed the Rs 500 mark amidst recent developments and strategic partnerships.
Paytm’s Recent Developments:
- Approval from NPCI: Paytm’s approval to operate as a third-party app by the National Payments Council of India (NPCI) positions it alongside competitors like Google Pay and PhonePe.
- Strategic Partnerships: Paytm’s collaborations with Axis Bank, HDFC Bank, SBI, and Yes Bank aim to facilitate seamless business migration, signaling proactive measures to address operational challenges.
Motilal Oswal’s Assessment:
Despite regulatory scrutiny and business restrictions imposed on its subsidiary Paytm Payments Bank (PPBL) by the Reserve Bank of India (RBI), Paytm’s business volumes in February exhibited a moderate impact.
Forecasts and Estimates:
- Target Price: MOSFL maintains a neutral rating on Paytm stock with a target price of Rs 530, indicating a potential upside of 30%.
- Revenue and Profit Outlook: The brokerage estimates a decline in Paytm’s FY25E revenue and contribution profit by 24% and 30%, respectively, with the contribution margin expected to sustain at 51% over FY25E.
Market Performance:
- Stock Recovery: Despite facing significant declines in February, Paytm’s stock has recovered some losses and turned positive for March.
- Trading Position: Currently trading over 27% higher than its 52-week low but remaining over 59% lower than its 52-week high, Paytm’s stock reflects market volatility and investor sentiment.
Motilal Oswal’s Observations:
The brokerage underscores Paytm’s ability to navigate business challenges, emphasizing the importance of execution capabilities in the forthcoming quarters. They closely monitor Paytm’s ongoing business transition and its potential to regain lost ground and resume growth.
