Shares of One 97 Communications Ltd, the parent company of Paytm, surged over 4 percent today after a significant block trade saw 0.8 percent equity stake in the company change hands for Rs 327.8 crore.
About 47.2 lakh Paytm shares were sold at an average price of Rs 701 per share, reported CNBC TV18. Following the trade, Paytm stock rose to Rs 713.2 on the NSE, up from its previous close of Rs 690, pushing the company's market capitalisation to Rs 45,400 crore.
Paytm share price momentum driven by upgraded outlook, regulatory relief
Amid the stock's upward momentum, Emkay Global Financial Services upgraded Paytm rating to 'Add' from 'Reduce' this week. The brokerage firm also raised the target price to Rs 750 from Rs 375, citing easing regulatory challenges and Paytm's ongoing efforts to optimise operating expenses. The new target price implies an upside of a further 7 percent now.
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Paytm shares have been on an uptrend, with the stock up 63 percent over the past six months, significantly outperforming the Nifty 50 index, which gained 18 percent during the same period.
Paytm's strategic initiatives bringing back investor confidence
Emkay said that Paytm's loan distribution business is expected to accelerate, while its broking and insurance distribution segment has already turned profitable. Additionally, the company’s decision to divest its operationally heavy entertainment business (ticketing business to Zomato) is expected to bolster cash reserves.
Paytm remains open to selling off other non-core assets to focus on profitability, with Emkay projecting that the company will turn EBITDA positive by Q4 FY25.
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In September 2024, Paytm’s stock regained momentum, crossing the Rs 700 mark for the first time since January 2024, when the Reserve Bank of India's crippling curbs on Paytm Payments Bank knocked down the share price.
The stock has been on a recovery path since hitting an all-time low of Rs 310. The company recently received approval from the finance ministry to further invest in its payment services business, adding further confidence.
Favorable market conditions aiding Paytm growth prospects
With improving market conditions and potential easing of US interest rates, Paytm, along with other new-age tech companies like Zomato and MakeMyTrip, continues to attract investor interest. Emkay Global noted that foreign portfolio investors (FPIs) are particularly focused on these internet-driven businesses, seeing strong growth potential from India’s rapidly expanding digital economy.
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