Shares of One 97 Communications Ltd (Paytm) plunged 7 per cent in Tuesday's trade as Q3 contribution margin missed analyst estimates amid higher DLG (default loan guarantee) cost. Analysts though insists Paytm has continued to witness an improvement in its business metrics, saying disbursements have started to recover and are off the lows of Q1 and gross merchandise value (GMV) is also improving at a steady rate.
JM Financial expects the impact of DLG cost to normalise with contributing margin reverting back towards 55 per cent (excluding UPI incentives) and the company reporting PAT profitability next quarter, thanks to UPI incentives worth Rs 350 crore. It reiterated its 'Buy' rating on the stock with a March 2026 target price of Rs 1,250, valuing Paytm at 70 times FY27 EPS. Paytm shares fell 7.17 per cent to hit a low of Rs 833.40 on Tuesday.
"We largely maintain our contribution profit estimates for FY25/FY26. We estimate Paytm to turn Ebitda positive by FY27. We value Paytm at Rs 950, based on 18 times FY30 Ebitda discounted to FY26E, which corresponds to 6.1 times FY26E sales," MOFSL said while retaining its 'Neutral' rating on the stock.
YES Securities said the goal of Ebitda breakeven this year seems on track, giving the management confidence to target PAT breakeven. This brokerage has maintained its ‘ADD’ rating on Paytm with a revised price target of Rs 1,050.
Emkay Global said the lower net payment margin was the only minor upset in Q3.
"Exit MTU improved QoQ to 72mn from 68mn (Sep-24), but the average MTU base stood slightly lower at 70mn, as consumer onboarding started after NPCI approval in Oct-24. With the merchant payment/lending business going strong, an improving MTU will create a strong funnel for the financial/marketing service business/revenue that, along with better treasury income, should put Paytm on an early path to profitability in FY26E," it said.
The brokerage recently upgraded Paytm to 'Buy' from 'Add' with a target price of Rs 1,050.