Paytm share surpasses the Morgan Stanley objective and crosses the 700 mark.

Paytm share surpasses the Morgan Stanley objective and crosses the 700 mark.

After receiving buy ratings from all of the top domestic and international brokerage and research firms, Paytm’s stock price has surpassed the target prices set by YES Securities and Morgan Stanley, while it is just centimetres away from the targets set by Bank of America, CLSA, and JM Financial Services.

The Paytm share price has increased by more than 36% in the last four trading days, taking back the 700-point milestone. The business reached an operating profitability milestone with EBITDA before ESOP cost at Rs. 31 crores, well ahead of its estimated schedule of September 2023, prompting the analysts to become positive and lift their target price on Paytm shares.

One97 Communications’ (Paytm’s) share price has increased 30% in the past month and almost 40% in 2023. The target prices for Paytm had been set at Rs 695 by Morgan Stanley and Rs 600 by YES Securities, respectively.

While Bandhan Bank, BofA, and CLSA set their target prices at Rs. 730, Rs. 750, and Rs. 750, respectively. The fintech behemoth’s operational revenue climbed 42% (year over year) to Rs 2,062 crore, led by expansion in its direct payments business and continued growth momentum in the credit industry and commerce sector.

Paytm reported a continuous rise in the total value of merchant payments for January 2023 in its business operating performance. $15 billion was the total amount of merchant GMV processed through the platform in January, representing a YoY gain of 44%.

The business maintained its dominance in offline payments, with 6.1 million merchants now paying membership fees for payment devices. At the same time, MTU stood at 89 million, representing a solid growth of 29% YoY.

For the fourth day in a row, Paytm shares have increased. What motivates the rally?

Since Paytm’s earnings for the quarter that ended in December 2022 were released, its stock has been rising. The stock increased for the fourth consecutive session, 5% to a day’s high of Rs 710.30 on the BSE.

Paytm achieved an EBITDA profitability of Rs 31 crore in the December quarter. At a consolidated level, the business continues to lose money. However, Paytm’s close loss decreased by over 50% to Rs 392 crore in the quarter that ended December 31, 2022, from Rs 778.5 crore at the same time the previous year.

Paytm reported that its merchant payment volumes (GMV) for January totalled Rs. 1.2 lakh crore ($15 billion), an increase of 44% year over year. The corporation asserted that its loan distribution operation had grown significantly, with disbursements of Rs 3,928 crore, or $480 million, up 327 per cent. Additionally, it disbursed 3.9 million loans in January, an increase of 103%.

Recent attention has been focused on shares of modern tech businesses because they have dramatically corrected from their recent highs. From its 52-week high of Rs 969, reached on February 10, 2022, the price of Paytm stock has decreased by more than 30%. It has since recovered more than 54% from its November 24, 2022, 52-week low of Rs. 439.60.

What motivates the rally of Paytm?

Following a double upgrade by Macquarie, which raised its target price for the Paytm stock from Rs. 450 to Rs. 800, the company ended the day up 15%. Paytm stated that it had been “positively surprised by the distribution of financial services income by a large margin” and had “managed to control overall expenses and charges” since its previous target price decrease.

However, much more work has to be done in corporate governance, such as appointing a non-executive independent chairperson and adding more independent board members.

This big global financial institution cut its price objective for Paytm in March 2022 due to regulatory challenges, including a declining likelihood of obtaining a banking licence. With a target price of Rs. 1,200 when coverage on the stock was first announced in November 2021, it lowered it to Rs. 700 and then to Rs. 450.

On the strength of noticeably better Q3 FY23 (December 2022) quarter earnings, Goldman Sachs increased its target price for Paytm to Rs 1,150 from Rs 1,120. The company added that the current share price of Paytm “continues to offer a tempting entry point into India’s largest and one of the most profitable fintech platforms.”
Due to about Rs 130 crore in UPI incentives, Paytm’s revenue growth might increase to 47% YoY in Q4 FY23.

What do the technical charts show, exactly?

Paytm made its first effort to challenge the 200 SMA following the significant spike but failed to do so convincingly, according to Osho Krishan, Sr. Analyst – Technical & Derivative Research, Angel One Ltd. Since it is now trading close to the sloping trend line that connects the most recent two swing highs, caution is expected to persist in the counter until it reaches the 650-660 region.

“In terms of levels, 570–550 is expected to cushion any wobble, followed by the firm support of 520. On the higher end, 650-660 will probably operate as immediate resistance, then the immediate swing high of 720 levels in a comparable period, “Added Krishan.

edited and proofread by nikita sharma