
Foreign brokerage Bernstein has reiterated its Outperform rating on One 97 Communications Ltd, also known as Paytm, setting a target price of Rs 1,100. This represents a potential upside of approximately 25 per cent from current levels. Bernstein highlights several near-term catalysts that could drive this upward momentum.
The brokerage anticipates non-linear EPS growth, with Paytm's current revenue lines projected to grow at a compound annual growth rate (CAGR) of around 20 per cent. Indirect expenses are expected to be contained at a 10 per cent CAGR, translating to an estimated EPS of Rs 70 by FY30E, which supports the target price.
Following the development, the stock rose 3.33 per cent to hit a high of Rs 893.50 on BSE. The scrip is down 5.20 per cent in the past two weeks but is up 19.95 per cent for the three-month period.
Bernstein's projections assume a total cost CAGR of 13 per cent, with direct costs forecasted to grow at a 16 per cent CAGR from FY25 to FY30. The company aims for a 22 per cent revenue CAGR, driven by an increasing share of high-margin lending revenues. Indirect expenses are projected to grow at 10 per cent.
Paytm is expected to maintain a stable market share in Unified Payments Interface (UPI) payments and net payment margins, which could be bolstered by a higher share of UPI payments within the company’s payments mix.
The brokerage forecasts that Paytm's loan disbursals will grow to approximately 3.6 times the FY24 volume, with personal and merchant loans anticipated to expand at a 35 per cent CAGR from FY25E to FY30E. This assumes the Buy Now, Pay Later (BNPL) product is not revived.
Improvement in consumer Monthly Transacting Users (MTUs) is expected to drive a 15 per cent CAGR in marketing revenue. Bernstein sees potential catalysts such as the award of a Payment Aggregator license, sustainable profitability over two to three quarters, and the revival of the wallet offering.
There is also the potential for restrictions on Paytm Payments Bank Limited (PPBL) to be revoked, which could further enhance Paytm's position in the market.
Overall, Bernstein's analysis suggests that Paytm's growth trajectory could be supported by consistent operational performance, strategic financial management, and favourable market conditions.