Paytm shares surged by 5% on Thursday, reaching a peak of Rs 565 on the BSE, following the company's announcement that it had received approval for a downstream investment in its wholly-owned subsidiary, Paytm Payments Services Limited (PPSL).

This positive development came as Paytm also expressed its intention to reapply for a payment aggregator (PA) license, a move that has been viewed favorably by market analysts.

In an official statement, Paytm disclosed that the Ministry of Finance, Department of Financial Services, had granted approval for the investment into PPSL, which will now proceed to resubmit its PA application.

The company emphasized that PPSL would continue providing online payment aggregation services to its existing partners.

Paytm reiterated its commitment to maintaining high regulatory standards, with a focus on contributing to the Indian financial ecosystem.

Following the announcement, Paytm's shares experienced a notable rise, hitting Rs 565 before settling at Rs 545.50, marking a 1.38% increase.

Market analysts have welcomed the approval, noting that it helps alleviate some of the regulatory concerns surrounding Paytm.

In contrast, Ventura Securities issued a more bullish outlook, predicting that Paytm's stock could more than double to Rs 1,170 over the next 24 months under its base case assumptions.

In a more optimistic scenario, Ventura set a target price of Rs 1,444, indicating a potential three-fold increase in the stock's value. Even in a bearish scenario, the brokerage believes the stock could reach Rs 870.

Ventura also projected strong financial growth for Paytm over the next few years. It expects the company's revenue to grow at a compound annual growth rate (CAGR) of 14.1% to Rs 14,531 crore by FY27, with contribution profit rising 15.6% to Rs 8,301 crore, and pre-ESOP EBITDA soaring 54.5% to Rs 1,829 crore.

Additionally, Ventura forecasts that Paytm will turn profitable in terms of post-ESOP EBITDA and net earnings by FY27, marking a significant turnaround from the losses recorded in FY24.

The expected growth is attributed to an increase in GMV (gross merchandise value) to Rs 32.1 lakh crore, a more than fourfold increase in loan disbursals, and a doubling of revenue from marketing services.

The resumption of services like Paytm Wallet, FASTag, BNPL, and house rental payments, which were previously discontinued, is anticipated once regulatory concerns are resolved.