Shares of One 97 Communications, the parent company of Paytm, rallied as much as 5% to their day’s high of Rs 1,166 on the BSE on Thursday after it reported a profit of Rs 184 crore for the fourth quarter, compared with a loss of Rs 540 crore in the same quarter last year.
The year-ago performance was impacted by a one-time charge linked to CEO Vijay Shekhar Sharma relinquishing his employee stock options. Revenue from operations for the quarter rose 18% year-on-year (YoY) to Rs 2,264 crore.
Paytm also reported a positive EBITDA of Rs 132 crore, versus a loss of Rs 88 crore a year earlier, though it was lower than the Rs 156 crore reported in the December quarter.
EBITDA margin came in at 6%, compared with a negative 5% in the corresponding period last year. The company said comparable EBITDA, excluding UPI and PIDF incentives, improved by Rs 330 crore year-on-year, indicating stronger underlying profitability.
Paytm shares: Should you buy, sell or hold?
Jefferies on Paytm shares
Jefferies has maintained a Buy rating on Paytm with a target price of Rs 1,350, an upside of 22% from current levels. The brokerage said revenue momentum helped offset the impact of missing UPI incentives during the quarter. The Wall Street major highlighted that revenue growth of 18% was driven by the financial services business and came despite the absence of both PIDF and UPI incentives. The brokerage added that Paytm’s strong revenue momentum could continue to support earnings even amid risks related to UPI incentives.
Goldman Sachs on Paytm share price
The international brokerage has maintained its “Buy” rating on Paytm with a target price of Rs 1,400, implying a potential upside of 26%. The brokerage said Paytm, one of India’s largest consumer-to-merchant digital payments platforms, operates across multiple total addressable markets that are expected to grow at a 15-20% CAGR over the next five years.
According to Goldman Sachs, the last two years have been challenging for the company, but it now sees improving growth visibility and a stronger overall outlook. The brokerage cited resolution of most regulatory issues, signs of recovery in payments market share and monthly transacting user growth, as well as continued cost discipline as key positives.
It also highlighted optional upside triggers from recently launched postpaid offerings, the potential wallet launch, possible MDR on UPI and any favourable regulatory interventions. Goldman Sachs expects Paytm to deliver a revenue CAGR of 21% between FY26 and FY28, while forecasting EBITDA margins to more than double during the same period.
Bernstein on Paytm
The brokerage maintained its “Outperform” rating on Paytm with a target price of Rs 1,500, an upside of 35% from current levels. The brokerage said Paytm’s EBITDA remained resilient despite the expected loss of PIDF incentives and the absence of UPI incentive recognition during the quarter.
It highlighted continued strength in the financial services segment, with revenue from the business rising 12% quarter-on-quarter and 38% year-on-year, likely driven by sustained momentum in merchant lending.
Bernstein also pointed to improving consumer engagement, noting that UPI volumes grew 46% year-on-year compared with industry growth of around 21%, despite muted monthly transacting user growth. While near-term monetisation remains limited, the brokerage believes stronger engagement could support medium-term growth in marketing revenues.
Paytm Management commentary
Management said revenue growth is expected to accelerate in FY27, supported by merchant payment expansion, scaling of its asset-light financial services business, consumer monetisation and AI-led operating leverage
(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)
