Paytm‘s share price continued to recover on Monday morning surging up 5% to hit the upper circuit.

What Happened: The shares of the fintech giant have been upbeat since the National Payments Corporation of India (NPCI) approved the company as a Third-Party Application Provider (TPAP) under the multi-bank model for UPI services.

The development also made analysts at Yes Securities optimistic about the stock’s future. The analysts upgraded the stock’s rating to “buy” for the first time since they started covering the stock. The brokerage previously had a “neutral” rating on the stock. The target price is set at ₹505 — around 36% upside from the stock’s last closing price of ₹370.

The domestic brokerage firm said that it is crucial to acknowledge the significance of the approval received by the company for its UPI business. Without this approval, Paytm’s UPI operations would have ceased entirely.

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Previously, OCL conducted UPI transactions through Paytm Payments Bank as its Payment Service Provider (PSP), utilizing a unique UPI handle with “@paytm.” However, with the transition to the multi-bank model, OCL has partnered with Axis Bank, HDFC Bank, SBI, and YES Bank, ensuring the continuity of its UPI business.

Before the release of RBI FAQs, the payments giant faced limitations in marketing and communicating its position effectively. However, with clarity now available, the company is actively engaging in communication efforts to minimize client loss and aims to regain any clients who may have shifted to other app platforms, the analyst added.

Last week, global brokerage firm Citi had also said that this migration process will take 1-2 days after the National Payments Corporation of India's approval. Further, its report highlighted that the distribution-only loan segment, where Paytm acts as a facilitator without handling collections, is expected to see a faster recovery compared to loans with collection services. “Within the distribution business, credit card distribution has largely been unaffected,” it added

Price Action: Paytm’s share price was up 4.94% upper circuit at ₹380 in the morning hours of trading on Monday.

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