Paytm shares: JM cuts target price; cites 3 key triggers for stock

Domestic Brokerage firm JM Financial has cut its target price of One97 Communications, the parent company of Paytm, but it has maintained its buy rating on the stock, considering a sharp correction in the counter in the last few months. The brokerage believes that potential regulatory triggers enable strong optionality, as it sees three triggers for the stock.

"With Paytm working its way up post the disruption last year, we anticipate three potential regulatory triggers over the coming fiscal year – MDR on higher ticket / larger merchants’ UPI payments; removal of embargo on Paytm Payments Bank; and grant of PA (Payment Aggregator)/PG (Payment Gateway) license," said JM Financial.

Despite the sharp selling pressure in the markets, shares of One97 Communications rose nearly 3 per cent to Rs 806 on Tuesday, but finally settled at Rs 801.10 for the day, commanding a total market capitalization of more than 51,000 crore. The stock had settled at Rs 783.55 on Friday.

Shares of Paytm have crashed nearly 25 per cent from its 52-week high at Rs 1,063, hit in December 2024. However, it has gained about 160 per cent from its 52-week low at Rs 310. The stock has managed to post double digit gains in the last one month, but it's still below 63 per cent from its IPO price of Rs 2,150, in November 2021.

While even one of these coming to fruition could create significant upside opportunity, timing is trickier to predict. It has already received a reprieve with NPCI allowing it to onboard UPI customers, said JM Financial. However, It has lowered its target multiple to 60 times considering the rising volatility in equity markets.

"With CMP implying 25 times FY27E Adjusted Ebitda multiple, we find limited downside but upside movement could be sharp and substantial, particularly considering our FY27 Ebitda estimate can rise by 35 per cent if either of trigger 1 or trigger 2 materialise, it added, reiterating a 'buy' rating on the stock with a 19 per cent lower target price of Rs 1,010 (Rs 1,250 earlier)," added JM.

Among other brokerage firms, Motilal Oswal has a 'neutral' rating on Paytm with a target price of Rs 870. Jefferies  and Geojit BNP Paribas had a 'hold' rating on the stock and a target price Rs 850 and Rs 845, respectively.