Paytm Shares Record 25% Gain in 1 Week: Why Investors Find Vijay Shekhar Sharma's Firm Attractive Again

Following the Samsung deal, Paytm shares jumped around 5.40 per cent to Rs 424.40 on Thursday morning, compared to Wednesday’s closing price of Rs 402.65
Vijay Shekhar Sharma, Founder, Paytm
Vijay Shekhar Sharma, Founder, Paytm

Shares of Vijay Shekhar Sharma-led One97 Communications, the parent company of Paytm, rallied over 6 per cent on Thursday as the fintech major entered into a partnership with Samsung.

Samsung launched flight, bus, movie, and events ticket bookings on Samsung Wallet, in collaboration with One97 Communications Ltd, India’s leading payments and financial services distribution company, the company informed through exchange filing early on Thursday.

Following the announcement, Paytm shares jumped around 5.40 per cent to Rs 424.40 on Thursday morning, compared to Wednesday’s closing price of Rs 402.65. In the last one week, the stock has surged around 25 per cent, up from a nearly 52-week low of Rs 339.85 on June 5.

On Thursday, the stock settled 25.55 points or 6.35 per cent higher at Rs 428.05 on the NSE

“We are delighted to launch new features on Samsung Wallet in collaboration with Paytm. These features allow Galaxy smartphone users to purchase bus and airline tickets, as well as movie and event tickets, without needing to switch between multiple apps,” said Madhur Chaturvedi, Senior Director, MX Business, Samsung India.

In addition, Paytm has received IRDAI’s approval to withdraw its application to register as a general insurance company. The company will now focus on insurance distribution rather than insurance manufacturing.

In the last five months, Paytm shares have been facing severe selling pressure after the Reserve Bank of India (RBI) imposed a regulatory ban on Paytm Payments Bank Limited (PPBL) in January 2024. The stock has plunged 33 per cent on a year-to-date (YTD) basis and over 57 per cent from its 52-week high of Rs 998.30 hit on October 10, 2023.

The RBI crackdown caused Paytm shares to plunge sharply. One97 Communications shares fell 36 per cent from January 31, 2024, to February 2, 2024. The freefall eroded market capitalisation by Rs 17,738.41 crore in two days.

Amar Deo Singh of Angel One says that earlier there were several negative factors including the RBI action that led to a sharp correction in Paytm’s stock price but now the stock seems to have bottomed out. Generally, whenever there is negative news either from the regulator or company, investors generally tend to stay away until they get more clarity.

“We are witnessing some pullback in the stock as it has surged around 30 per cent from lows of Rs 310 to a recent high of Rs 440 amid expectations that the worst might be behind the company and it could witness growth in the coming times. One major factor behind this rally is investors appear to be more comfortable buying the stock at these levels. Secondly, news of a partnership with Samsung and IRDEA granting permission to withdraw their application has led to positive sentiments among investors,” he said.

Deo cautioned that wherever there is some regulatory concern around the company, investors should remain cautious.

Jigar S Patel, Senior Manager - Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, support will be at Rs 403 and resistance at Rs 440 A decisive close above the Rs 440 level may trigger a further upside to 470. The expected trading range will be between Rs 375 and Rs 475 for a month.

Brokerage firm Motilal Oswal has slashed its earnings estimates and projected Paytm to achieve EBITDA breakeven in FY26. "We value Paytm based on 15 times FY28E Ebitda and discount the same to FY26E at a discount rate of 15 per cent. We thus value the stock at Rs 400, which implies 2.3 times FY26E P/Sales," it added with a 'neutral' rating.

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