Paytm shares price in near-term optimism, says analysts after NPCI approval, Q2 results

Shares of One97 Communications, parent company of payments aggregator Paytm Ltd. surged as much as 6% on Wednesday, October 23, but gave up most of the gains soon after.

The initial surge came after the National Payments Council of India (NPCI) granted approval to OCL for onboarding new UPI users, nine months after the Reserve Bank of India had barred the onboarding of any new users.

The NPCI approval though, is subject to OCL adhering to norms issued by NPCI and other regulatory guidelines.

Paytm has completed the migration of 13.5 crore UPI customers to the Paytm TPAP app, it said in an exchange filing on Tuesday.

Founder Vijay Shekhar Sharma in Paytm’s earnings call on Tuesday highlighted that UPI is an “extraordinarily large opportunity” and is “way bigger than what we anticipate now.”

Once Paytm has the ownership of customers on its platform, it will be able to cross-sell financial services and products, Sharma said.

Brokerage firm Jefferies maintained its “hold” rating on Paytm with a price target of ₹700, sayig that the risks to Paytm have “meaningfully reduced” with the NPCI approval.

However, it did not upgrade the stock as it believes that Paytm’s valuations of 3.1 times September 2026 Enterprise Value to Sales, capture the near-term optimism on the stock.

Bernstein too retained its “outperform” rating with a price target of ₹600, which implies downside from current levels for Paytm. It said that the September quarter Gross Merchandise Value (GMV) and Merchant Loan disbursals were the key positives for Paytm and the effort taken on cost control was also visible.

The brokerage called the results as “decent” and those that show a “clear improvement from the bottom” witnessed last quarter.

Paytm reported a net profit of ₹930 crore during the September quarter, which included a one-time gain of ₹1,300 crore due to the sale of its ticketing business to Zomato.

For the September quarter, Paytm’s Gross Merchandise Value (GMV) increased by 5% on a sequential basis and the management expects this trend in GMV growth to continue accelerating in the current quarter due to the festive season.

Out of the 18 analysts that have coverage on Paytm, six each have a “buy”, “hold” and “sell” rating respectively.

Shares of Paytm are currently trading 3% higher at ₹708. The stock, owing to its recent upmove, turned positive on a year-to-date basis.