Paytm Business Model For Sustained Growth Gets Mirae Thumbs Up With New Buy Rating

Mirae Asset Financial Services has initiated coverage on Paytm-parent One97 Communications with a 'buy' rating and a target price of Rs 1,210, implying a potential upside of 20%.

Paytm stands out as a pioneer in India's digital payments revolution, said the brokerage, boasting an industry-leading base of 42 million registered merchants, including 11.2 million payment devices. Despite a temporary regulatory hiccup that reduced monthly transactions (71 million in the second quarter of fiscal 2025 versus 100 million in the third quarter last fiscal), Paytm maintained its merchant base by implementing strategic retention measures, they add.

The company's innovation-driven approach, ability to cross-sell within its ecosystem, and new pure payments business model provide the foundation for sustained growth, cited the brokerage. Mirae Asset estimates 20% GMV CAGR over fiscals 2024 to 2030, aligned with Paytm's 27% market share in digital payments.

Mirae Asset expects Paytm's plan to deploy more payment devices and scale its merchant network to drive payment services revenue at a 22% CAGR over fiscals 2024 to 2030.

Cross-selling opportunities, particularly in financial services like Buy Now, Pay Later and wallets, are projected to contribute significantly, with a 25% revenue CAGR.

Mirae Asset anticipates overall revenue to grow at 22% CAGR from fiscal 2025 to fiscal 2030, with contribution margins ranging between 53%-64%. The company is on track to achieve Ebitda breakeven (before ESOP expenses) by the final quarter of this year and net profit breakeven by the final quarter of fiscal 2026.

The scrip rose as much as 2.56% to Rs 1,007.55 apiece, the highest level since Dec. 31, 2024. It pared gains to trade 0.93% higher at Rs 991.50 apiece, as of 2:12 p.m. This compares to a 0.59% decline in the NSE Nifty 50 Index.

It has risen 47.17% in the last 12 months. The relative strength index was at 58.26.

Out of 19 analysts tracking the company, eight maintain a 'buy' rating, six recommend a 'hold,' and five suggest 'sell,' according to Bloomberg data. The average 12-month consensus price target implies a downside of 22.4%.