Motilal Oswal Bullish On The Parent Stock Of India's Largest Payment App

Recently One97 Communications, the parent company of India's largest digital payment app Paytm, has released its key monthly business updates for May 2023. The figures showcased that the app has been able to maintain its leadership position in the market.

Leading stock-broking firm Motilal Oswal has a "buy" rating on One97 Communications with a target price of Rs 900. The brokerage firm believes that the company is well-positioned to benefit from the growth of the digital payments market in India.

One97 Communications has a strong market share in the online payments market and is also expanding into offline payments through its Paytm PoS app. In the offline payment mechanism, the company has strengthened its leadership with ~7.5 million devices deployed.

Motilal Oswal believes that the company is well positioned to benefit from the following factors:

• Growth of digital payments market in India: The growth is being driven by the increasing penetration of smartphones and the growing popularity of online shopping.

• Company's strong market share in online payments market: One97 Communications has the largest market share in the online payments market in India. This gives the company a strong competitive advantage and allows it to generate significant revenue.

• Its expansion into offline payments: The company is expanding into offline payments sector through its Paytm PoS app. This will help the company to reach a wider customer base and generate additional revenue.

• Growth in loan disbursals and ticket size: The average ticket size is also witnessing a consistent increase due to a scale-up in post-paid and personal loans. It stood at ~INR11.3K per loan in May. Merchant loans also improved last month after a drag in April due to a technology system upgrade at one of the leading distributing partners.

• Good investment option: Overall, Motilal Oswal believes that One97 Communications is a good investment option for investors who are looking for exposure to the growth of the digital payments market in India.

Valuation & Rating

One97 Communications has seven lending partners and aims to onboard 3-4 more next year. But there is a competitive landscape as more players are penetrating. Also, the company stock is trading at a high valuation compared to other Indian companies. This could make it a risky investment if the company's growth does not meet expectations.

But for now, it is showing a strong leadership position and strengthens it through expansion. Hence, Motilal Oswal has given a 'buy' call with a target price of Rs 900.

Scrips Movement

The latest stock price of the company has declined marginally by 0.64% to Rs 709.45 per share on an intraday basis. In the last one year, the share price has rallied by 15.43% but since its listing in November 2021, it has plunged by 54.64%.

Disclaimer

The stock has been picked up from the brokerage report of Motilal Oswal. Greynium Information Technologies, the author or the brokerage firm will not be liable for any losses caused as a result of decisions based on this write-up. Goodreturns.in advises users to consult with certified experts before making any investment decision.