Paytm shares jump 5% after getting first buy recommendation

NEW DELHI: Shares of One 97 Communications (Paytm) surged nearly 5 per cent in Friday's session after Dolat Capital came out with a ‘buy’ call on the counter, a first such recommendation since the company's debut on Dalal Street.

The stock was up 4.98 per cent to Rs 1680.50 on NSE.

Dolat Capital Market Pvt, the third brokerage to initiate coverage on the digital payments giant after Macquarie Capital Securities and JM Financial Institutional Securities, said its transition to a “manufacturer” of financial services from an agent, cross-selling of services, and strong growth in the number of users will help the company.


The brokerage has set a target price of Rs 2,500, which is 16 per cent higher than the company’s issue price. JM Financial has a sell rating on the stock, while Macquarie has rated it as underperform with a target at Rs 1200.

Paytm’s “super app” has emerged from a pure “want” category to reach the “need” status, Dolat analysts wrote in their report. It positions the company as "one of the strongest digital brands" to garner a significant share of opportunities that will evolve in the Indian internet ecosystem, they said.

“Entry multiple for Paytm might appear steep, however, we see it as sustainable since it is the most impactful and real-economy internet business. Rather we believe the valuations would have scope to expand as it attracts investor interest given the high growth, inclusion led scalable opportunity it provides and that too at the intersection of two largest sectors in the country viz. Finance & Technology,” the broker said.