One 97 Communications, the parent entity of Paytm, may take another couple of quarters to turn profitable, but the shares of the payments aggregator are already showing some signs of earlier recovery.

The stock of Paytm surged another 2.3% in Monday’s trade to hit its highest level in almost three years. Since the start of the year, Paytm’s shares have rallied as much as 59% and are headed for the best year since their listing.

Interestingly, the rebound in the company’s stock is remarkable considering the counter was bruised after the Reserve Bank of India’s restrictions on Paytm Payments Bank Ltd (PPBL). In January 2024, the Central bank had barred PPBL from onboarding new UPI customers due to supervisory concerns.

However, after a nine-month ban imposed by RBI, the company received approval from NPCI in October to onboard new UPI users. The development was seen as a much-needed positive for the company, as it will accelerate gross merchandise value (GMV) growth.

“This was among the two key regulatory risks. After this, only RBI Payment Aggregator approval is pending,” wrote foreign brokerage Jefferies in a note.

Moreover, Paytm also completed the sale of stock acquisition rights in Japan’s digital payments firm PayPay Corp for a consideration of ₹2,364 crore, which will further strengthen its balance sheet.

During the September quarter, the company reported a net profit of ₹930 crore, bolstered by an exceptional gain of ₹1,345 crore on account of the sale of the entertainment ticketing business. The company had previously been guided to turn the corner by the end of the current financial year, with expectations to exceed that guidance and deliver significant profitability.

“We expect to get very meaningful profitability relatively soon, becoming a business that is throwing off cash,” said the chief financial officer at Paytm, Madhur Deora, post-Q2 earnings call.

Further, if the Street recommendations on the stock is anything to go by, the counter has witnessed more and more analysts retreating from their bearish stands.

As a result, the number of “sell” recommendations on Paytm to the total analyst recommendations has come down to 28% from 44% recorded in May this year. Of the 18 analysts who track the stock on Bloomberg, seven suggest a “buy,” whereas six of them recommend a “hold, “and the remaining five analysts advise a “sell.”

On Monday, shares of Paytm went past the ₹1,000 mark as they added 5.4% in just two sessions. Nevertheless, the stock is still 53% away from its initial public offer price of ₹2150.