Value buying? Paytm spikes 10% after plunging to near all-time low

NEW DELHI: Shares of One 97 Communications found many buyers on Thursday and jumped over 10 per cent after it stooped close to an all-time low during the day as some analysts said it is now offering traditional business kind valuations.

The stock traded at Rs 578, up 10.22 per cent on BSE. The counter had hit an all-time low of Rs 520 on Wednesday.

Dolat Capital, which sees a whopping 200 per cent upside potential in the stock, on Thursday said at a current equity valuation of sub-$4 billion, Paytm is trading at a modest 3.6x on FY23E revenues and offers traditional business kind valuations despite its hyper-growth and inclusion led scalable business opportunity for investors.

“We firmly believe that Paytm will emerge as the best internet play in Indian market given its wide variety utilities that service both ‘needs and wants' of consumers and maintain our Buy rating on the stock with DCF based target price of Rs 1,620 implying 9x/7x on its EV/Rev in FY24/FY25E,” Rahul Jain of Dolat Capital said in a note.

Paytm’s shares have been under heavy selling pressure ever since listing on the bourses. It is currently trading at a fourth of the valuation the market accorded it during the IPO. Recently, amid plunging prices, BSE sought a clarification from the company.

Paytm in its reply said the business fundamentals remain robust.

Though, despite occasional buying, not everyone is as bullish on the counter. Macquarie, which has set the tone for selling in the stock from Day 1, has a target of Rs 450 on the stock, and as in the past, if it comes true, the stock may fall further.