Here’s what made Paytm share price rise 12% in the last month

Shares of One 97 Communications, the parent company of Paytm, have been on a sustained upward trend in recent times.

Notably, the Paytm share price has gained close to 12% in the last month. Additionally in 2023 so far, the share price has jumped about 53%.

Strong results? Solid business performance? Analysts turning bullish? Which among these are the reasons for the rally in the Paytm share price? Let’s try and decode!

Paytm share price: Reasons for rally

Strong results: A key contributor to the recent rise in Paytm shares is its robust results for the March quarter. 

For the Jan - Mar ‘23 period, the fintech player reported a net loss of Rs 168 crores. Although the company remained in losses, it was significantly narrow from the previous year loss of Rs 763 crores.

Meanwhile, revenues jumped by 51% from the previous year to Rs 2,334 crores for the Jan - Mar ‘23 period.

Solid business performance: The strong results marked an upbeat operational showing by the company. While gross merchandise volume jumped by 40% from the previous year to Rs 3.62 lakh crores in the March quarter, average monthly transacting users grew by 27% from the previous year to 9 crores.

Meanwhile, the company’s loans business is also showing positive signs. Both the number and value of loans distributed rose on a yearly basis.

While the number of loans increased by 82% from the previous year to 119 lakhs, the value of loans distributed witnessed a quantum leap of 253% from the prior year to Rs 12,554 crores.

FLDG approval by RBI: Regulatory approval from the Central Bank for the First Loss Default Guarantee (FLDG) program has helped the rally in the Paytm share price too. FLDG is a program that fintechs use to collaborate with banks and NBFCs to distribute loans.

The approval for the FLDG program has been much awaited from the fintech companies and finally it has arrived. However, the RBI has capped the FLDG amount at 5 percent of the total loan value. This means that the losses originating from the loans given under this program will be insured up to 5% of the total loan value.

Paytm analyst target price

Bank of America: The renowned global brokerage has upgraded the Paytm stock rating to a “Buy” with a target price of Rs 885. The firm cited the company’s growing strength in the loans business and the high margins soundbox devices business as key drivers of the Paytm share price growth in the near future.

Goldman Sachs: The renowned brokerage has a “Buy” rating on the stock with a price target of Rs 1,150. The firm reposed confidence in the company’s business model which is expected to reflect in the Paytm share price growth. Further, resolution of regulatory issues is also expected to be a tailwind, according to the firm.

Macquarie: The global brokerage has an “Outperform” rating on the stock with a price target of Rs 800. Burgeoning operating profitability and strength in operations have been cited as growth drivers for the company in the near term.

Citi: The renowned brokerage has a “Buy” rating on the stock with a price target of Rs 1,144. Monetization of key services offered has been cited as a driver of Paytm share price growth in the future by the firm.

Motilal Oswal: The top domestic brokerage has a “Buy” rating on the stock with a price target of Rs 900.

Yes Securities: The renowned domestic brokerage has a “Neutral” rating on the stock with a price target of Rs 750.

Dolat Capital: The top brokerage has a “Buy” rating on the stock with a price target of Rs 1,250.

This is not investment advice. Investments in the securities market are subject to market risk, read all the related documents carefully before investing. Past performance is not indicative of future returns.