Recent updates from prominent brokerage firms provide fresh perspectives on key stocks in the Indian market. Here’s a summary of their latest recommendations for Paytm, Vodafone Idea, and Jana Small Finance Bank:
Paytm: Neutral to Hold Ratings
UBS: Neutral | Target Price: ₹490
UBS has maintained a neutral rating on Paytm, setting a target price of ₹490. This stance reflects the brokerage’s cautious approach, despite recent positive developments. Paytm has secured government approval for investment in its payment gateway business, marking a significant step forward. The approval clears a major regulatory overhang and is expected to boost investor sentiment. Additionally, Paytm is preparing to reapply for its payment aggregator (PA) license from the RBI. This license is crucial for expanding its merchant base, which has been restricted since late 2022 due to regulatory issues.
Jefferies: Hold | Target Price: ₹420
Jefferies has issued a hold rating on Paytm with a target price of ₹420. While acknowledging the recent approval from the Ministry of Finance for downstream investment, Jefferies notes that the immediate business impact might be marginal. The key regulatory hurdle remaining is the National Payments Corporation of India (NPCI) approval for onboarding new users. The brokerage sees diminishing regulatory concerns as a positive sign but remains cautious due to the uncertainty surrounding the RBI’s final decision.
Vodafone Idea: Buy Rating
Citi: Buy | Target Price: ₹22
Citi has maintained a buy rating on Vodafone Idea, setting a target price of ₹22. The brokerage views the Supreme Court’s decision to hear Vodafone Idea’s Adjusted Gross Revenue (AGR) curative petition as a significant development. The hearing, scheduled for August 30, could potentially alleviate a substantial portion of the company’s AGR debt burden. Citi estimates that a favorable outcome could reduce the debt by ₹4-5 per share or more. This development could also positively impact related entities such as Indus Towers and Bharti Airtel, although its effect on Bharti is expected to be less pronounced. No direct implications for Jio are anticipated from this update.
Jana Small Finance Bank: Buy Rating
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Investec: Buy | Target Price: ₹725
Investec has initiated coverage on Jana Small Finance Bank with a buy rating and a target price of ₹725. The brokerage highlights the bank’s recent turnaround as a testament to its management’s resilience and strategic vision. Jana Small Finance Bank’s business correspondent-led approach has granted it access to Agricultural Priority Sector Lending (PSL) while providing downside protection. Additionally, its Asset Reconstruction Company (ARC) strategy has helped manage reported Gross Non-Performing Assets (GNPA).
Investec sees strong potential for Jana Small Finance Bank, predicting robust earnings growth over FY24-27. The bank’s cost ratios and credit costs are expected to improve, leading to a projected 21% compound annual growth rate (CAGR) in profit before tax (PBT) and an average return on equity (RoE) of 17%. The stock is currently valued at 1.2 times FY26 estimated price-to-book (P/B) ratio, which Investec considers inexpensive.
The recent brokerage updates reflect a mixed outlook for Paytm, a positive view on Vodafone Idea, and an optimistic forecast for Jana Small Finance Bank. As these companies navigate regulatory landscapes and market dynamics, their stock performance will likely be influenced by upcoming developments and broader economic conditions. Investors should stay informed and consider these expert recommendations when making investment decisions.
