Paytm Shares: Motilal Oswal Updates Paytm Target Price, With Up To 30% Gain For Brokerage Firms

The parent company of the finance platform Paytm, One 97 Communications, saw its shares trade over Rs 410 on the National Stock Exchange (NSE) intraday on March 22. This is a 32% recovery from the firm’s February 52-week low of Rs 318.35. The recovery has been steady.

The National Payments Council of India (NPCI) has granted Paytm permission to operate as a third-party app, allowing it to function similarly to Google Pay and PhonePe. To guarantee a seamless business move, the organization has also partnered with Axis Bank, HDFC Bank, SBI, and Yes Bank.

Despite the fintech’s struggles with the RBI’s actions on the Paytm Payments Bank (PPBL), Motilal Oswal believes that the stock has 30% further potential.

“We also expect UPI transaction volume and value data to continue declining in March 2024. The effect on financial business (loan origination volumes) further restrains revenue growth and profitability, and after reviewing our data, we believe that the payment processing margin would drop as the proportion of high-yielding wallet businesses declines dramatically, according to the local brokerage.

Nonetheless, Paytm has been given permission by the NPCI to operate as a third-party app provider (TPAP), allowing it to function similarly to its competitors, PhonePe and Google Pay. Axis Bank, HDFC Bank, SBI, and YES Bank have partnered with Paytm to facilitate a seamless business transition.

“We continue to closely monitor the current business shift and Paytm’s capacity to win back lost revenue and pick up speed throughout FY25–26E. Accordingly, we project a 24% drop in revenue and a 30% reduction in contribution profit for FY25E. Over FY25E, we project the contribution margin to remain at 51%, according to MOSFL.

The lowered target price of Rs 530 by Motilal Oswal is based on a 15-time reduction to FY26 EV/EBITDA from FY28E. The brokerage company will keep its “neutral” recommendation on the stock in the meantime and review it when the fourth-quarter data are in. Up to 30% is anticipated for the brokerage from its previous closing.