Shares of Paytm parent One97 Communications on Friday jumped 1.85% to Rs 1,958.80 on the BSE, a record high. The stock reclaimed the Rs 1,900 mark in about five years since its market debut on November 18, 2021, when shares had begun trading at Rs 1,955, against the IPO price of Rs 2,150. The stock closed up 1.14% at Rs 1,945 on Friday.
The shares jumped in an overall falling market. Paytm shares rose 3.5% from the day’s low, which was below the previous close.
The stock has surged nearly 50% so far this year, giving hope to all those who bought shares and stayed invested since then.
For companies like Paytm, payment instruments play an important role in customer acquisition, retention and monetisation. While standard UPI serves as a massive, low-margin customer acquisition engine, prepaid payment instruments (PPIs) and credit cards generate significantly higher gross and net payment margins.
When a fintech operates purely as a UPI third party application provider or payment aggregator, it acts as a bridge between two external banks and retains only a thin processing fee. Having its own PPI wallet helps acquire merchants, and the transaction stays internal. There is no external issuing bank taking 75% of the fee, allowing the fintech to retain almost the entire merchant fee.
That probably explains the excitement. The company already reported a fifth consecutive quarter of profits for September 2006.