Shares of payment aggregator Paytm experienced a significant rally, rising by as much as 11.01% to reach an intraday high of ₹763 per share on October 23, 2024. This surge follows the announcement that the National Payments Corporation of India (NPCI) has granted Paytm approval to onboard new UPI users, adhering to all procedural guidelines.
Positive News from NPCI
In an exchange filing, Paytm confirmed the NPCI’s approval, stating, “We would like to inform you that vide letter dated October 22, 2024, the National Payments Corporation of India has granted approval to the Company to onboard new UPI users, with adherence to all NPCI procedural guidelines and circulars.”
Recovery from Regulatory Setbacks
Earlier this year, the Reserve Bank of India had imposed restrictions on Paytm Payments Bank Ltd, limiting its ability to onboard new UPI users. Analysts view the recent NPCI approval as a crucial step toward revitalizing Paytm’s user base. A report from Emkay highlights, “Paytm has finally received NPCI approval for adding new UPI users, which paves the way for re-accelerating its dwindling user base and further signals an easing of regulatory stance.”
Financial Performance Insights
Paytm’s Q2 results have also contributed to the optimism surrounding the stock. The company’s consolidated net profit soared to ₹930 crore for the September quarter of FY25, a significant increase from ₹290 crore in the same period last year. However, revenue from operations declined 34% year-on-year to ₹1,659 crore, attributed partly to a one-time gain of ₹1,345 crore from the sale of its movie ticketing business to Zomato.
Future Outlook
Despite the mixed financial results, analysts maintain a positive outlook for Paytm. Emkay projects that the company’s cost optimization measures will lead it towards profitability by FY26/27. Other analysts, like those from Motilal Oswal, also emphasize the importance of the cash infusion from the sale of the entertainment business, stating, “The sale of its entertainment business would provide a financial boost, allowing it to reinvest in other high-potential areas.”
Market Performance and Target Prices
As of 11:53 AM on October 23, Paytm shares were trading at ₹758.90, reflecting a 10.42% increase. The company’s market capitalization now stands at ₹47,261.48 crore. Analysts have varying outlooks on Paytm’s future, with target prices ranging from ₹490 to ₹700.
Paytm’s recent developments, including regulatory approvals and strong profit figures, have positioned the company favorably in the market. However, ongoing challenges, such as revenue declines, underscore the need for continued focus on growth and profitability.
(This article is for informational purposes only and does not constitute financial advice. Please consult a financial advisor before making investment decisions.)
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