Looking to buy Paytm stock? Brokerages predict up to 30% upside in 1 year

According to analysts, Paytm is focussing in propelling its profitability flywheel by adopting a structural cost discipline, and adopting a margin-accretive mix. Read Paytm stock analysis

Paytm share price outlook: If you choose to invest ₹1,000 in Paytm stock today, chances are your investment may value ₹1,300 after a year. This 30 per cent upside, as per brokerages, is among the bull case scenarios for the stock. At the very least, they see at least 10 per cent rise in Paytm stock over the next one year.

 

According to analysts, Paytm is focussing in propelling its profitability flywheel by adopting a structural cost discipline (marketing, non-sales employees, technology), lowering its capital intensity via refurbished devices, and adopting a margin-accretive mix (subscriptions, VAS, improved processing economics).

 

 

Paytm's product innovation and investment in a comprehensive artificial intelligence (AI) stack, they believe, should sustain the growth-to-profitability momentum and reinforce its fintech leadership going ahead.

 

"While sales reinvestment and ESOP normalisation may temper near-term gains, the operating leverage would support the improvement in profitability going ahead. We forecast that Paytm is likely to report Ebitda margin of 5.4 per cent in FY26, 10 per cent in FY27, and 15 per cent in FY28," said analysts at Mirae Asset Capital Markets.

 

ESOP is employee stock option plan, and Ebitda is earnings before interest, tax, depreciation, and amortisation.  On the bourses, Paytm share price rose 5.1 per cent to ₹1,333.45 per share on the BSE in the intraday tradem driven by brokerages' bullish bets and he Morgan Stanley Capital International's (MSCI's)  decision to include One 97 Communications (Paytm) in its Global Standard Index as part of its November review.  CATCH STOCK MARKET UPDATES TODAY LIVE

Paytm Q2 result highlights  

 

On November 4, Paytm reported a consolidated net profit of ₹21 crore for the September quarter of the current financial year (Q2FY26), hit by a one-time impairment charge related to its online gaming joint venture.

 

In the year-ago period, Paytm’s net profit stood at ₹930 crore which included a one-time gain of ₹1,345 crore from the sale of its movie and events ticketing business to Zomato.

 

The net profit was ₹123 crore in the June quarter (Q1FY26).

 

Revenue from operations, meanwhile, saw a 24 per cent jump to ₹2,061 crore Y-o-Y and 7 per cent Q-o-Q, led by growth in financial services (revenue up 63 per cent Y-o-Y/9 per cent Q-o-Q) and merchant payments (up 21.1 per cent Y-o-Y/10 per cent Q-o-Q) verticals.

 

It reported a contribution margin (CM) of 59 per cent, maintaining it at the higher range of guidance.

 

Further, with payment processing margin improving both due to mix and pricing along with efficiencies in indirect expenses, Paytm delivered 320 basis point (bps) rise in Ebitda margin with reported Ebitda almost doubling Q-o-Q to reach ₹140 crore.

Focus on AI

During the quarter, Paytm launched industry first ‘AI Soundbox’, to transform soundbox from a payment alert device into an intelligent business assistant, capable of delivering real-time insights on payments and business performance.

 

Separately, it expects monetisation across equity broking and Margin Trade Funding (MTF) to improve going forward, driven by AI-related product offerings.

 

In the Marketing services segment, Paytm expects the company’s gross merchandise value (GMV) to improve driven by MTU (monthly transacting users) growth, upselling and higher ROI for advertisers through AI.

 

According to analysts at Dolat Capital, Paytm is embedding AI across merchant and enterprise offerings. While AI agents and Soundboxes will help small and medium merchants improve analytics, marketing, and multilingual engagement, enterprise AI and “commerce cloud” pilots would target larger clients.

 

"For Financial Services, the management expects AI-led insights to strengthen collections, underwriting, and cross-sell, thereby unlocking margin gains and new revenue lines. These initiatives are entirely built in-house and are with minimal outlay," they noted.  ALSO READ | MSCI Nov rejig: Should you add Paytm, Fortis, GE Vernova to your portfolio?

Paytm target prices increased

 

Factoring in Q2FY26 results, Dolat Capital has lowered its revenue estimates by 2.7 per cent and 6.1 per cent for FY26 and FY27, respectively.

 

Absolute Ebitda estimate, it said, has been maintained for FY26, but reduced for FY27 by 6.4 per cent with Ebitda margin revised upward by 17bps for FY26 and left unchanged for FY27.

 

"Further, EPS is lowered by 13.7 per cent for FY26 and by 4 per cent for FY27 on lower OI assumptions. For FY28, we estimate revenue growth of 20 per cent Y-o-Y, Ebitda margin of 15.1 per cent, and earnings growth of 22.6 per cent Y-o-Y," the brokerage said with a 'Buy' rating and a higher target price of ₹1,650 (from ₹1,400).

 

Those at Emkay Global, meanwhile, have increased FY26 and FY27 Ebitda estimates by 35 per cent and 14 per cent, respectively. They build in 25 per cent revenue CAGR over FY25-27, with PAT of ₹1,650 crore in FY27.

 

"The stock trades at 30x FY28 EV/Ebitda. Considering cash on the books of ₹1,310 crore, the long growth runway for payments and financial services, and the various optionalities (such as BNPL, Wallet, scale-up of Rupay Credit Cards), we believe the risk-return is attractive. We retain 'Buy' with a revised target price of ₹1,600 (earlier ₹1,500)," it said.  That said, Mirae Asset Capital Markets has downgraded the stock to 'Add' from 'Buy' due to over 10 per cent rally in a month. It has a target of ₹1,430 on Paytm.  Motilal Oswal Financial Services, too, maintained its 'Neutral' rating with a target of ₹1,200.