Paytm shares scaled about 3% in Thursday's BSE trade, reaching a record 52-week high of Rs 942.5, after global brokerage firm UBS maintained a 'Neutral' rating on the fintech business and boosted its target price to Rs 1,000 from Rs 490.
The brokerage observes that considerable improvements have already been priced in and advises that the next phase of business growth must be driven by revenue, as the majority of the cost optimization has already taken place.
UBS forecasts Paytm's revenue in FY26 to be similar to that in FY24. The adjusted EBITDA break-even point is projected to be reached by Q4FY25. In addition, the stock has been dramatically re-rated, with regulatory concerns rectified.
A week ago, global brokerage company Bernstein reiterated its optimistic view on Paytm, upping its target price for the fintech behemoth from Rs 750 to Rs 1000 per share.
While keeping a 'Outperform' rating, Bernstein observes that talks around Paytm have changed from survival worries to a thorough examination of both bull and bear case possibilities.
In the bull case, Bernstein expects Paytm to benefit from lending on its own balance sheet, as well as improvements in payment margins. This might increase the company's base case earnings per share (EPS) expectations by almost 100%. However, in the bear case, Bernstein expects payment margins to tighten and loan disbursement growth to stagnate, leading in a 40% drop in their base case EPS predictions.
Meanwhile, earlier this week, the digital payments service provider announced the launch of an automatic top-up option for its UPI LITE service, which allows for PIN-less transactions for payments under Rs 500. The new feature, which is now accessible to select Yes Bank and Axis Bank customers, automatically recharges the UPI LITE balance when it goes below a specified threshold.
The UPI LITE service supports daily transactions of up to Rs 2,000, making it suitable for small-value payments such as groceries, transportation, and daily purchases. Users can add to their UPI LITE balance directly from linked bank accounts, with a focus on smooth, clutter-free transactions.
Paytm has also developed a UPI statement download tool, which allows users to track transactions conducted via UPI LITE independently. These minor transactions are performed through an on-device wallet, eliminating the need to physically access bank accounts, resulting in more simplified bank statements.
Paytm's UPI service is integrated with major Indian banks such as State Bank of India, HDFC Bank, Axis Bank, and Yes Bank. The platform has extended internationally, now facilitating UPI payments in the UAE, Singapore, France, Mauritius, Bhutan, Sri Lanka, and Nepal.
