Paytm shares hit 52-week high after 'outperform' rating by Bernstein

Shares of One 97 Communications, the parent company of Paytm, surged as much as 2.8% to hit a 52-week high of ₹931 after the global research and brokerage firm Alliance Bernstein LLP recommended 'outperform' rating to the fintech major.

The share price of the fintech company opened a gap-up at ₹925, up 2.14% as against the closing price of the previous session at ₹905.60. At the current share price, shares of the company are trading 107% higher than the 52-week low of ₹439.60 touched on November 24 last year.

At the time of reporting, the market capitalisation of Vijay Shekhar Sharma-led company stood at ₹57,707.39 crore with more than 2.71 lakh shares exchanging hands on the BSE as against the two-week average of 1.21 lakh shares.

Bernstein has also revised the target price of Paytm to ₹1,100 per share, a potential upside of 31% from its current market price. The brokerage firm expects Paytm to achieve this target price in next 12 months. The brokerage firm expects Paytm to achieve a market share of approximately 4% by FY26E and an EPS of ₹130 by FY30.

Meanwhile, Bernstein has given an ‘underperform’ rating to SBI Cards with a target price of ₹650, which is 22% lower than its current market price.

Notably, domestic brokerage firms have also earlier retained a ‘BUY’ rating for Paytm. Analysts at ICICI Securities had earlier revised the target price of Paytm to ₹1,055. “We expect financial services income to increase 30% driven by ~40% growth in disbursement between FY23-FY25E, while we factor-in yields moderation from 4.4% in FY23 to 3.7% in FY25E,” says the brokerage firm.

In the April to June quarter, Paytm reported a consolidated net loss of ₹357 crore compared to a loss of ₹644 crore in the corresponding period last year and ₹168 crore in the March quarter (Q4 FY23).

The consolidated revenue from operations jumped 39.4% to ₹2,341 crore in Q1 FY24, from ₹1,679 crore in the year-ago period. However, it was flat as compared to ₹2,334 in Q4 FY23. The YoY growth in revenue was driven by an increase in merchant subscription revenues as well as Gross Merchandise Value (GMV) and growth in disbursements of loans through its platform.

In Q1 FY24, revenue for financial services and others grew 93% YoY to ₹522 crore on account of the increase in repo rates over the last year. The payments revenue grew by 31% YoY to ₹1,414 crore, led by an increase in GMV and higher subscription revenue.

Last week, Chinese e-commerce giant Alibaba Group subsidiary Antfin transferred its 10.3% stake in the fintech company to its founder and chief executive Vijay Shekhar Sharma. With this, Sharma family the biggest stake of 19.55% in the company.