
One 97 Communications (Paytm) shares climbed 9 per cent in Wednesday' trade after its management said Paytm could turn profit after tax (PAT) positive next quarter, thanks to multiple growth triggers such as Merchant Discount Rate (MDR) on UPI and return of wallet. While Paytm's revenue missed the Street estimates, contribution margin came in line with expectations. Losses jumped sequentially on one-time charge towards acceleration of ESOP expenses.
Emkay Global said Paytm reduced its overall losses in FY25, mainly due to business consolidation and cost optimisation and that it expects Paytm to turn net profit-positive in FY26 on the back of revenue acceleration from payment as well as the financial services business, higher treasury income on cash balance, and lower depreciation/ESOP cost.
The potential introduction of MDR on UPI is expected to significantly boost Paytm's revenue and incentivise the company to drive market share gains in consumer payments, MOFSL said.
"We maintain our contribution profit estimates and project Paytm to turn Ebitda positive by FY27. We value Paytm at Rs 870 based on 18 times FY30E Ebitda discounted to FY26E, which corresponds to 5.2 times FY26 sales. We reiterate our NEUTRAL rating on the stock," MOFSL said.
Emkay Global said the potential re-introduction of MDR on high-value UPI transactions and receipt of payment aggregator and wallet license (either its own or on rent) should further boost Paytm's revenue and profitability and act as a stock catalyst. This brokerage suggested 'Buy' with a target of Rs 1,050 on the stock.
UBS suggested a 'Neutral' rating on Paytm with a 12-month price target of Rs 1,000. The stock rose 9.48 per cent to hit a high of Rs 892.60 today.
“Continued discipline on the cost side led to EBITDA beat while PAT was weaker due to one-time charge towards acceleration of ESOP expense,” UBS said.
The foreign brokerage said Paytm's Q4 merchant loan momentum was strong, with take rates aiding revenues. The company’s total merchant base rose to 44 million, with a healthy addition of 7 lakh devices. For the quarter Merchant loans grew 13 per cent QoQ, helping financial services revenue rise 9 per cent sequentially.
JM Financial said given the valuations and likely upside risks, it is keeping 'Buy' on Paytm with a March 2026 target of Rs 1,070.