Shares of One97 Communications, owner of Paytm, soared on February 6 after it lowered its consolidated net loss for the quarter that ended in December 2022.

The digital payments operator’s revenue rose 41% year-on-year to Rs 2,062 crore in October-December, driven by higher subscription and loan payments by merchants for payment devices.

The company also narrowed its net loss to Rs 392 crore in the December quarter from Rs 778 crore a year ago, backed by solid revenue growth.

In the reported quarter, the company posted EBITDA of Rs 31 crore before employee stock option (ESOP) costs, a proxy used by new-age companies to define operational profitability.

Commenting on this, Paytm founder and CEO Vijay Shekhar Sharma said the company achieved operational profitability three quarters earlier than expected. The company had given guidance for operating profit by the second quarter of 2023-24.

As a result, shares of Paytm surged in morning trade on February 6. It was up 4.42% on the National Stock Exchange at Rs 548.20 at 9.43 am. The stock had hit an intraday high of Rs 563.95.

Buoyed by Paytm’s strong quarterly results, brokerage Goldman Sachs has a “buy” call on the stock with a price target of Rs 1,150, implying a more than triple upside from Friday’s close.

The broker expects profitability to be sustained, supported by solid traction in payments, operating leverage and UPI reimbursement. Goldman expects Paytm’s adjusted margin to expand to 6% in the next quarter.