Why do brokers expect a 66% increase in Paytm share price?
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#paytm #paytmipo #upi #indianipo #startup #techstartup
Paytm was dubbed as the biggest IPO of any Indian company. Before its IPO, Paytm was the most valued startup in India. Warren Buffett, the greatest investor of all time, was among the investors in Paytm.
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However, Paytm failed to carry on its charm to the stock market and had a very poor debut. Paytm's share price is yet to recoup its listing price.
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Paytm was supposed to enter the record book as the biggest IPO. But the company entered the record book for its poor listing. Paytm listed on the exchanges at ₹1,950, a 9% discount against the issue price of ₹2,150.
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The first day ended at ₹1,564 with a 27% crash in share price. Paytm is currently trading at ₹790, 63% down from its issue price.
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Many brokerages have initiated coverage on Paytm. The first company to cover Paytm, Macquarie still maintains its target price as ₹700.
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On the other hand, ICICI Securities set a target of ₹1,325, Goldman Sachs at ₹1,425, and JP Morgan has a target price of ₹1,350. These target prices have revived the hope for Paytm.
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Paytm has a 10% market share in UPI based on transaction value in January 2022. PhonePe and Gpay collectively have a market share of 84%.
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NPCI, the company that owns UPI, has mandated the third-party apps to bring their market share to 30% by December 2023.
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With NPCI’s new rule, PhonePe and GPay will have to cap their market share and leave a considerable portion of their market share for other apps.
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Brokerages expect Paytm to pick up market share from PhonePe and Gpay. An increase in UPI transactions share will play a crucial role in Paytm’s business growth.
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The loan disbursal business of Paytm is also doing fairly well. In Q3, the company has seen a 336% year on year increase in its loan disbursal and a 73% quarter on the quarter increase.
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With an increasing loan book, the brokerages see the company's bottom line to do well in the coming months.
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Though brokerages expect as much as 66% upside in Paytm’s share price from current levels, investors and traders are still very bearish about the company.
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The company's market cap has seen a massive decrease since its debut. It will be interesting to see if Paytm can make a turnaround like the brokerage companies expect.
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You can read the unrolled version of this thread here: typefully.com/index_daily/GgRb5Yl