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Paytm Share Price:  Paytm's parent company, One97 Communications Ltd shares surged up to 7% in Tuesday's trade following the favourable report from Dolat Capital, a brokerage firm. The brokerage firm kept a "buy" rating on Paytm's stock and raised its target price as well. Dolat Capital raised the target price of Rs 920 per share, which is 30% above the current market price. At 3:05 p.m., Paytm shares were trading at 729.85, up 6.05 per cent. The stock hit an intraday high of 742.0/ per share during trading hours.

Dolat Capital Raises Target Price

Dolat Capital emphasized several significant developments in the previous three months that indicate a reduction in challenges and an improvement in the prospects of Paytm's various business segments. Some noteworthy improvements include the successful completion of the Paytm handle migration, the removal of regulatory obstacles with Foreign Direct Investment (FDI) approval for payment aggregator (PA) licenses, and a stable market share, as evidenced by recent UPI subscriber data.

The brokerage firm believes that Paytm is on track to achieve adjusted EBITDA breakeven by Q4 of FY25, excluding UPI incentives, with positive cash flow expected. Dolat Capital characterizes the company as "resilient and stable for strong growth."

According to report, One97 Communication is expected to recover from the impact of RBI's regulatory action on Paytm Payments Bank Limited (PPBL) Paytm Postpaid, and FAStag. Despite these challenges, Paytm benefits from a variety of use cases, a substantial customer base of over 78 million monthly transaction users (MTU) and 150 million annual transaction users (ATU), and a robust technology platform.

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Dolat Capital Report

Dolat Capital's report notes that this has enabled the company to take advantage of India's fast-growing digital payment environment.
The brokerage firm predicts that the company will achieve consolidated revenue growth in the next decade. It has also projected steady profit growth starting from FY26. It considers discounted cash flow (DCF) valuation to be the most appropriate approach for capturing the company's long-term potential.

Dolat projects Paytm's growth in two phases: a 28% revenue compound annual growth rate (CAGR) from FY25 to FY30, followed by an 18% CAGR from FY30 to FY40.

The company is expected to achieve after-tax profit (PAT) profitability by FY2026, with a constant EBIT margin of around 16.1 per cent from FY31 to FY40. Dolat's DCF model assumes a cost of capital of 12% after FY40 and a terminal growth rate of 2%.

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