The ₹2,150 IPO wall may finally crack for Paytm
The IPO price of One97 Communications, the parent company of Paytm, was set at Rs 2,150 when Paytm made its debut in November 2021. However, the stock has not returned to this level since its listing. Analyst Bernstein recently raised its price target for Paytm shares to Rs 2,200, representing a 52% upside from the current trading price of Rs 1,506.
This is the highest target price on the Street and the first time Paytm has received a target above its IPO price. Bernstein expects the introduction of the merchant discount rate (MDR) on UPI transactions to start in FY28E and improve Paytm's net payments margin by 3-4 basis points, resulting in a 30% increase in FY30E EPS. The brokerage also assumes a headline MDR of around 35 basis points, which could generate around Rs 22 billion of additional EBITDA by FY30E.
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