Paytm shares extend gains, up 42% from one-year low level; Rs 700 level possible in near term?
Shares of Paytm’s parent, One 97 Communications Ltd, extended their gains for the second straight session on Wednesday. The stock today settled 6.87 per cent higher at Rs 624.55. It has jumped 11.68 per cent in two consecutive days. Considering today’s closing level of Rs 624.55, the scrip has gained 42.07 per cent from its one-year low of Rs 439.60, hit on November 24 last year. That said, the counter has dropped 26.04 per cent from its 52-week high of Rs 844.40, touched on August 8, 2022.
Paytm has climbed 17.56 per cent in the year so far. After today’s close, an analyst said the stock may climb up to Rs 705 in the near term, while another suggested booking profits around Rs 620 to Rs 670 levels.
AK Prabhakar, Head of Capital, IDBI Capital, said, “The counter looks risk-taking. One needs to see the company’s path to profitability.” Paytm has been under pressure to turn profitable ever since its tepid listing in late 2021.
Ganesh Dongre, Senior Manager – Technical Research Analyst at Anand Rathi Shares and Stock Brokers, said, “On the daily charts, the stock has seen a sharp correction. At this juncture, it has formed a bullish engulfing pattern. So, traders can buy this stock for the target price of Rs 645-660 in the short term with a stop loss placed at Rs 560.”
Ravi Singhal, CEO, GCL, said, “The stock looks in base-building mode on technical charts. One can consider the ‘Buy on dips & Sell on rise’ strategy if lows don’t break below Rs 440. As far as levels are concerned, buy in the Rs 520 to Rs 550 range while booking profit near Rs 620 to Rs 670 levels.”
AR Ramachandran from Tips2trades said, “Paytm faced strong resistance at Rs 613 on the daily charts. A close above this resistance hints that it may lead to targets of Rs 656-705 in the near term. Support will be at Rs 585.”
Yet, Paytm has an average target price of Rs 1,053, Trendlyne data showed, suggesting a potential upside of 68.74 per cent. The scrip has a one-year beta of 0.98, indicating average volatility.
The stock traded higher than the 5-day, 20-, 50- and 100-day moving averages but lower than the 200-day moving averages. The counter’s 14-day relative strength index (RSI) came at 57.42. A level below 30 is defined as oversold while a value above 70 is considered overbought. The company’s stock has a negative price-to-equity (P/E) ratio of 16.90.
On the earnings front, the digital financial services company has narrowed its consolidated net loss to Rs 392 crore in the third quarter (Q3) that ended December 2022 (FY23) against a net loss of Rs 778.40 crore in the same period a year ago. In addition, Paytm posted its first quarterly positive cash EBITDA of Rs 30 crore in Q3 FY23, three quarters ahead of company guidance (of September 2023).
Meanwhile, Indian equity benchmarks extended their gains for the second straight session today, led by gains in pharma, state-owned lenders, automobile, consumer goods and financials.
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