Paytm hits 52-week high on strong volume, robust growth prospect

The payments operator, in recent weeks, has been making positive strides which have been reflected in its stock price. On June 8, Bank of America Securities (BoFA), upgraded its rating to 'buy' and raised the target price by nearly 10 percent to Rs 855. BoFA said that it expects revenues to improve backed by digitisation in the country, limited competition in the market, and a healthy cash balance.

Citi Research analysts tracking the company expect the payments operator to achieve operating break-even by FY24. Citi also reiterated its guidance that One97 Communications would report 7-9 basis points net payment margins in the near term and 5-7 basis points in the medium term.

The stock price has also been reacting positively after the Reserve Bank of India (RBI) approved the First Loss Default Guarantee Programme (FLDG), a product widely used by fintech firms to form collaborations with banks and Non-Banking Financial Companies (NBFC).

In the March quarter of FY23, One97 Communications, significantly trimmed its losses to Rs 168 crore from a massive Rs 768 crore in the same quarter last year. Revenue from operations jumped 52 percent to Rs.2,335 crore.

JP Morgan said that fourth quarter revenues continued to surprise positively largely from the Unified Payments Interface incentive. "The company can be the first Indian B2C internet stock to trade on profit rather than revenue multiples," analysts at the company said.

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