Paytm share price jumps 12% after NPCI approval to onboard new UPI users

Paytm share price rallied nearly 12% on Wednesday after the company received approval to onboard new users for its UPI application. Paytm shares jumped as much as 11.95% to ₹769.50 apiece on the BSE.

One 97 Communications, the parent company of fintech major Paytm, said that the National Payments Corporation of India (NPCI) has granted its approval to the company to onboard new Unified Payments Interface (UPI) users while adhering to NPCI’s procedural guidelines and circulars.

Earlier this year, the Reserve Bank of India (RBI) had imposed restrictions on Paytm Payments Bank Ltd (PPBL) in onboarding new UPI users on Paytm app.

The latest approval by NPCI comes in response to a request made by Vijay Shekhar Sharma, Founder and CEO of One 97 Communications, on August 1, seeking to lift the restrictions.

The NPCI approval paves the way for re-accelerating its user-base, analysts said.

“Paytm has finally received NPCI approval for adding new UPI users which paves the way for re-accelerating its dwindling user base and further signaling an easing of regulatory stance,” said Anand Dama, Senior Research Analyst at Emkay Global Financial Services Ltd.

Meanwhile, Paytm also reported its earnings for the second quarter of FY25 with the fintech major slipping into black.

Paytm Q2 Results 2024

Paytm parent One 97 Communications reported a net profit of ₹930 crore in the September quarter, benefitting from a one-time exceptional gain of ₹1,345 crore from the sale of its entertainment ticketing business.

The company said it achieved 11% quarter-on-quarter (QoQ) revenue growth due to a 5% QoQ increase in GMV, better realisation from devices and a 34% QoQ increase in revenues from financial services.

Paytm reported lower EBITDA (before ESOP) loss, at ₹1.8 billion ( ₹5.5 billion loss in 1Q), mainly due to continued cost optimization which, coupled with lower ESOP cost and one-off gain from sale of the entertainment business, led to the company’s first-ever PAT delivery at ₹9.3 billion, noted Anand Dama.

“Paytm’s cost optimization measures and gradual business turnaround should put it on an early path to profitability (EBITDA/PAT positive by FY26E/FY27E). Paytm’s further re-rating will be contingent on faster recouping of lost consumer MTU, strong bounce-back in the lending business as partner/attrition issues ease, and no further regulatory disruption,” said Dama.

The brokerage firm retains ‘Add’ rating with a DCF based Paytm share price target of ₹750 apiece.

At 12:45 pm, Paytm shares were trading 10.82% higher at ₹761.65 apiece on the BSE.  

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