The shares of crisis-ridden Paytm traded above Rs 410 on the National Stock Exchange intraday on Friday, a rebound of around 32% from its 52-week low of Rs 318.35 hit in February.
Paytm saw its worse after the Reserve Bank of India (RBI) put a ban over the operations of its payment bank services.
The company stock was maintaining a healthy zone before it witnessed the sudden fall after the regulator’s move.
In a significant development, Motilal Oswal sees a 30% upside in the stock. Analysts at Motilal Oswal believe that the RBI’s restrictions on PPBL have put the company at risk of losing customers and merchants, disrupting its growth trajectory.
The brokerage firm said that despite the company’s extensive reach, its ability to mitigate the business impact will depend largely on the execution capabilities over the coming quarters.
“We remain watchful on the ongoing business transition and Paytm’s ability to recover the lost business and resume growth trajectory over FY25-26,” Motilal Oswal said.
The impact on financial business further suppresses revenue growth and profitability, it said.
Further, Motilal Oswal maintained a ‘neutral’ rating on the stock with a target price of Rs 530 per share.
It also estimated the FY25 revenue to decline by 24%, while contribution profit declines 30%.
“We estimate contribution margin to sustain at 51% over FY25,” it said.
Notably, Paytm has recently received the National Payments Council of India (NPCI) approval to function as a third-party app, which will enable it to work like its peers Google Pay and PhonePe.
The company has also tied up with Axis Bank, HDFC Bank, SBI, and Yes Bank to ensure smooth business migration.