Paytm’s stock jumped 6% after Emkay Global upgraded its rating to a ‘Buy’ from ‘Add,’ increasing the target price to ₹1,050 from ₹750. The upgrade follows the recent National Payments Corporation of India (NPCI) approval, which removes a significant regulatory hurdle for Paytm.
Key Drivers Behind the Upgrade
- Regulatory Clearance: NPCI’s approval is expected to help Paytm regain its Monthly Transacting User (MTU) base over the next 12-18 months, supporting cross-selling of financial products like loans, insurance, and wealth solutions.
- Revenue Growth: Paytm is benefiting from robust merchant device subscription revenue, increased UPI usage with MDR on credit cards, and strong growth in its merchant loan business.
- Cost Optimization: Improved take rates and cost-cutting measures, combined with rising non-operational income (including treasury income), are strengthening Paytm’s profitability outlook.
Emkay forecasts that Paytm is on track to achieve profitability by FY26, with significant growth potential afterward. Paytm’s cash reserves, which make up 21% of its market capitalization, provide a solid safety margin for business expansion or potential shareholder rewards.
As of 9:20 AM, Paytm shares were trading 6.05% higher at Rs 911.00.
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