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What is the story about?
One97 Communications Ltd., parent company of payments aggregator Paytm, received its first share price target which was higher than its IPO price on Monday, August 10, after Bernstein raised its target.
Bernstein has raised its price target on Paytm to ₹2,200 from ₹1,500 earlier in its note on Monday, while maintaining its "outperform" rating. This is the highest target for Paytm on the street.
Paytm had made its stock market debut in July 2021 at an issue price of ₹2,150, a level it has not seen since then.
In its note, Bernstein stated that it is incorporating the MDR introduction on UPI transactions into its base case into its estimates for financial year 2028 onwards.
The brokerage believes that MDR could lift Paytm's net payments margins by three to four basis points, driving a 30% increase in its Earnings per Share (EPS) for financial year 2030 in comparison to the previous forecasts.
With this, the risks for Paytm shifts from whether MDR is permitted to how much of the published rate is ultimately retained.
"So, competitive intensity in merchant acquiring could increase further, as a result, realised economics could prove to be lower than published rates," Bernstein wrote in its note.
Over the weekend, the government issued a statement saying that consumers will not face UPI transaction charges. In case the MDR is introduced, it will be only for select merchant transactions above a certain threshold.
The statement further added that there is a need for a revenue model to make UPI self-sustaining and that it needs continued investment in cybersecurity, fraud provision and infrastructure.
23 analysts have coverage on Paytm, of which, 17 have a "buy" rating, five say "hold", and one has a "sell" rating on the stock.
Shares of Paytm are trading 8.3% higher on Monday at ₹1,561.4. The stock is now at 52-week high levels, and has extended its gains to 20% so far this year.
Bernstein has raised its price target on Paytm to ₹2,200 from ₹1,500 earlier in its note on Monday, while maintaining its "outperform" rating. This is the highest target for Paytm on the street.
Paytm had made its stock market debut in July 2021 at an issue price of ₹2,150, a level it has not seen since then.
In its note, Bernstein stated that it is incorporating the MDR introduction on UPI transactions into its base case into its estimates for financial year 2028 onwards.
The brokerage believes that MDR could lift Paytm's net payments margins by three to four basis points, driving a 30% increase in its Earnings per Share (EPS) for financial year 2030 in comparison to the previous forecasts.
With this, the risks for Paytm shifts from whether MDR is permitted to how much of the published rate is ultimately retained.
"So, competitive intensity in merchant acquiring could increase further, as a result, realised economics could prove to be lower than published rates," Bernstein wrote in its note.
Over the weekend, the government issued a statement saying that consumers will not face UPI transaction charges. In case the MDR is introduced, it will be only for select merchant transactions above a certain threshold.
The statement further added that there is a need for a revenue model to make UPI self-sustaining and that it needs continued investment in cybersecurity, fraud provision and infrastructure.
23 analysts have coverage on Paytm, of which, 17 have a "buy" rating, five say "hold", and one has a "sell" rating on the stock.
Shares of Paytm are trading 8.3% higher on Monday at ₹1,561.4. The stock is now at 52-week high levels, and has extended its gains to 20% so far this year.
