Should Investors Buy, Hold, or Sell Paytm Stocks After a 12 Percent Gain in Just Five Days?



Paytm Shares: A modern technology stock Paytm has increased by 12% in just 5 days. This follows a surge in tech equities across the board. The share price of Paytm has been steadily increasing since May 2022, when it reached a new low of Rs. 510.05 a share. In Tuesday's trades, Paytm shares opened higher for the fourth straight day. They later reached an intraday high on the NSE of Rs 723.60 per share, indicating a rise of about 2%.


"Paytm stock is witnessing significant rise supported with huge volumes, drawing cues from the robust demand in the IT companies internationally," said Ravi Singh, Vice President and Head of Research at ShareIndia. In this trend, the stock may reach levels of Rs 750. The future is still bleak, though, due to EBITDA losses and low-profit margins, which could prolong the time it takes to break even.

The average target price of nine experts on Paytm is Rs 891, according to Trendline data, indicating a 37% increase from current prices. On June 22, 2022, One97 Communications' stock price on the NSE finished at Rs 620.25, with the fintech stock experiencing a five-day increase of more than 12.14%.

What Do Brokerages Say?

The target price for the international brokerage firm Citi is Rs 915. On the other side, JP Morgan has kept its "overweight" rating on the company with an Rs. 1,000 target price.


However, Macquarie has set a target price of Rs 450 for Paytm since it thinks profitability is still a challenge and that it could take 12 quarters for Ebitda losses to become profitable.


The counter is bottoming out after forming a solid foundation at the 500 level, according to Santosh Meena, Head of Research at Swastika InvestmentBefore Ltd. With a strong positive divergence in the RSI, a breakout of the symmetrical triangle formation is currently taking place. It succeeds in closing above its pivotal moving averages, where we may anticipate its near-term targets of 870 and 990. On the downside, 650 ought to serve as a prompt and robust support level.


In a report published earlier this month, JPMorgan stated that it now expects Paytm to trade at Rs 1,000 rather than its previous estimate of Rs 1,200. Prior to it, the counter's target price was Rs. 1,350. Even the most recent target price suggests that the stock could rise by 60%.


JPMorgan has supported Paytm's road to profitability, noting that tighter cost control and a decline in Adjusted EBITDA loss are the main factors driving the stock.


The brokerage stated that the second quarter's higher profit markets prepared the ground for operating leverage.


The Paytm IPO was introduced in November 2021 with an equity share price range of Rs 2080 to Rs 2150. Since being listed on the BSE and NSE on November 18, 2021, it has been nosediving at a discounted price. At roughly Rs. 716 per equity share today, Paytm's share price is still about 67 percent below its upper price band of Rs. 2150. When Paytm's shares were listed in November of last year, investors suffered a significant loss. The stock plummeted from its highs of Rs 1,955 to a low of Rs 510.05, representing a staggering financial loss of almost 73.9%.


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