Synopsis: Shares of Paytm surged over 5.40% to Rs. 424.40 following a new partnership with Samsung, which integrates Paytm's services into Samsung Wallet. This boost helped raise the company's market capitalization to nearly Rs. 27,000 crore. The stock has gained 25% in the past week due to a recent circuit filter revision by the NSE.
Shares of Paytm surged over 5.40% to reach Rs. 424.40 on Thursday, bringing the market capitalization to just under Rs. 27,000 crore.
One 97 Communications Ltd, Paytm's parent company, saw its stock extend gains after announcing a partnership with Samsung.
This news was shared in an exchange filing early on Thursday.
Through this partnership, Samsung has launched flight, bus, movies, and event ticket bookings on Samsung Wallet, in collaboration with One 97 Communications Ltd, which owns the Paytm brand.
This partnership aims to enhance consumer convenience by offering an integrated booking experience directly through Samsung Wallet, providing access to a wide range of services via Paytm, as stated in the exchange filing.
Samsung, being India's largest consumer electronics brand, boosts the credibility and reach of this collaboration.
Following the announcement, Paytm shares climbed to Rs. 424.40 on Thursday, marking an over 5.40% increase in the early session.
This rise brings the market capitalization to just under Rs. 27,000 crore, after closing at Rs. 402.65 in the previous session.
The stock has seen a 25% gain over the past week, rising from Rs. 339.85 on June 5.
This recent rebound is largely due to a revision in the circuit filter for the stock.
On June 6, the NSE increased the circuit filter for One 97 Communications from 5% to 10%.
Previously, the company had a 20% circuit filter until January 31, 2024, but a series of lower circuits and increased volatility prompted a reduction to 5%.
With this partnership, Galaxy smartphone users can now seamlessly access Paytm’s services, including flight and bus bookings, movie tickets, and event bookings, all integrated within Samsung Wallet.
Users can avail these new services by updating their app through the Galaxy Store, according to the exchange filing.
In another exchange filing on Wednesday, Paytm announced that the IRDAI has accepted the withdrawal of its application for registering its associate company as a 'general insurance company'.
The fintech firm will now focus on insurance distribution rather than manufacturing.
Before this recovery, Paytm shares faced significant selling pressure following an RBI regulatory ban on Paytm Payments Bank (PPBL) in January 2024.
The stock had dropped over 50% from those levels and two-thirds of its 52-week high.
It remains 57% down from its 52-week high of Rs. 998.30 reached on October 10, 2023.
Macquarie has maintained an 'underperform' rating on Paytm with a target price of Rs. 275, predicting a further 25% decline as it anticipates challenging March and June 2024 quarters for the company.
Motilal has cut its earnings estimates and projects Paytm to achieve Ebitda breakeven in FY26.
"We value Paytm based on 15 times FY28E Ebitda and discount this to FY26E at a rate of 15%. We thus value the stock at Rs. 400, implying 2.3 times FY26E P/Sales," they stated, maintaining a 'neutral' rating.
In conclusion, Paytm's stock has experienced a notable rebound, rising over 5.40% to Rs. 424.40 following its partnership with Samsung, which integrates Paytm's services into Samsung Wallet.
This surge comes amidst a backdrop of recent circuit filter revisions and regulatory challenges.
Despite this positive momentum, market analysts remain cautious.
Macquarie maintains an 'underperform' rating with a target price of Rs. 275, while Motilal projects Ebitda breakeven by FY26 and values the stock at Rs. 400.
Investors are advised to consult financial advisors for tailored investment decisions.
Disclaimer: This stock market news is provided for informational purposes only and should not be considered investment advice. Readers are encouraged to consult with a qualified financial advisor before making any investment decisions.
