On 10 th August, Paytm share price saw a sharp rally as Paytm parent One97 Communications share prices rallied by almost 9% to hit a new 52-week high. This strong buying interest came after global brokerage Bernstein upgraded its target price for Paytm to 2,200 from 1,500 while maintaining its ‘Outperform’ rating.
The new Paytm target price have gained a lot of attention from investors because it is the first time ever Bernstein’s target has been set above Paytm’s initial IPO price of 2,150 since the fintech company listed in 2021.
Paytm Share Price Today: Stock Hits 52-Week High
Today’s shares of Paytm (India) increased by 8.87% to reach 1,568.75 during the trading session (Monday) hitting a fresh 52-week high. The market cap of the company crossed the 1 lakh crore level for the first time.
The stock has witnessed a significant bounce back from its recent lows. Paytm stocks are up approximately 66% from its 52-week low of 947.10, seen on 30 th March. The stock has returned handsome gains over the last 1 year as well.
The rally follows a tough phase for Paytm,whose stock slumped during the regulatory crisis of 2024. Trailing below 300 in Feb 2024, the stock has staged a come-back.
Bernstein Raises Paytm Target Price to 2,200
Behind the ultimate source of the recent Paytm stock rally was Bernstein’s adjusting valuation.
The brokerage raised the target on Paytm share price to 2,200 from 1,500 with an ‘Outperform’ rating. As per the last close mentioned in the report the target implies about 53% potential upside.
The bullish stance of Bernstein is mainly based on the prospect of UPI monetisation and implementation of MDR on certain UPI transactions.
Now factoring in potential revenues from the MDR into its base-case estimates from FY28 onwards.
UPI Monetisation Could Be a Major Growth Driver
Another aspect that has contributed to the bright outlook on Paytm is the potential of cashing in on UPI transactions.
At present, UPI transactions don’t normally attract MDR from merchants. However, because of recent changes in law, there no longer is a statutory ban on charging MDR on UPI transactions and the market debate has shifted to when and how the monetization could happen.
Bernstein thinks that even an abbreviated MDR structure can be significant for Paytm given the colossal value moved through digital payments.
The brokerage expects that possibly 50% of transaction value could turn MDR, with Paytm potentially taking an incremental 3-4 bps in net payment margin.
It may seem like a few basis points are not that big but when it is applied to a very large payment volume it can be very meaningful.
Paytm Could See 2,200 Crore EBITDA Boost
Based on Bernstein’s estimate of the potential UPI monetisation, it could significantly enhance the profitability for Paytm.
The brokerage believes the incremental 3-4 basis points of net payments margin could add up to around 2,200 crore of incremental EBITDA by FY30. The brokerage also foresees the possible change to lead to around a 30% upside to FY30 EPS.
This is, among other factors, one of the key reasons for Bernstein having moved UPI monetisation from optional upside into base-case estimates.
For investors, this is a significant development as it could enhance Paytm’s payments business and add to the company’s earnings profile.
Paytm Stock Technical Outlook
In addition to the basic reasons, technical indicators have also started to support Paytm shares.
However, Axis direct select Paytm in its top pick and mention the breakout abovea rounded-bottom pattern on weekly chart. As per the brokerage, the breakout was confirmed by the strong bullish candle and higher high-higher low formation.
The weekly RSI was also above the reference level, confirming the upward technical trend.
For the technical setup, Axis Direct had mentioned a target of 1535-1585 with a stop at 1343.
From Paytm IPO to 52-Week High: A Major Comeback
Paytm’s latest rally is even more remarkable when viewed in light of the stock’s performance since hitting the markets.
One97 Communications went public in November 2021 after raising around 18,300 crore through its IPO. The IPO’s price band was 2,080-2,150 (2,150 was the upper end of the issue price).
The stock then plummeted and went under 300 again by February 2024 due to regulatory issues.
Thus, the latest rebound marks a key inversion in investor sentiment. Bernstein’s 2,200 target is also interesting as it puts the brokerage’s valuation ahead of Paytm’s IPO price for the first time since its listing.
What Should Paytm Investors Watch Now?
For investors, the critical aspect will be whether UPI monetisation really becomes a persistent source of income.
Although Bernstein included a possible overall MDR benefit in its projections, the specific design, schedule, and extent of a future UPI MDR system are still factors to consider.
Investors will monitor the volume of payments made using Paytm, growth of merchant base, margins, profitability and regulatory changes.
The company’s potential to leverage its vast digital payments ecosystem into higher-margin revenues may stay at the heart of the Paytm stock outlook.
Paytm Share Price Outlook
Recent rally demonstrates that investor sentiment for Paytm has substantially recovered from the bearishness seen during the 2024 regulatory crisis. Bernstein’s 2,200 Paytm target, anticipation of UPI monetisation and improving technical momentum have reinforced the bullish stance.
However, brokerage targets are only estimates and not gaurantees. The actual Paytm share price performance will be based on earnings growth, regulation, UPI monetisation, payment margins and general market conditions.
In terms of investors monitoring the Paytm share price today, the key will be whether the stock can maintain the breakout and provide steady earnings progress that enables the recent rally to develop into a sustained medium-term uptrend.
Note: This article is written only for information and education purposes and should not be considered investment advice. Investors must do their own research and seek advice of professional financial adviser before making investment decision.
