Paytm Gets Neutral Rating From Motilal Oswal With Revised Target Price — Here's Why

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Motilal Oswal Report

One 97 Communications Ltd.’s strategic focus on financial services business and cost optimization should boost profitability, with the financial business contributing 27% of revenue by FY28E. Leveraging its merchant network, the company remains focused on scaling up its loan distribution, supported by strong lender partnerships.

Cost reductions and an estimated revenue CAGR of 26% from FY25-27E (Rs 114 billion by FY27E) will enable Paytm to achieve Ebitda breakeven in FY27E.

We expect the company to gain traction in new customer on-boarding and grow its monthly transacting users base, which will enable healthy cross-selling, while growth in the merchant business will remain the key profitability driver in the near term.

The company’s exploration of global markets, albeit with limited capital commitment, and its strong cash position (Rs 128.5 billion in Q3 FY25) further provide comfort. As per recent media reports the potential introduction of MDR on UPI will be a significant boost Paytm’s revenue and will incentivize the company to push for market share gains in the consumer payments.

Additionally, the company may shift its focus towards expanding its market share in the consumer segment. The recent SEBI approval for Paytm Money to venture into investment insights and research services presents an opportunity to diversify into wealth management, potentially unlocking a new stream of fee-based income.

We remain watchful on the challenging macro-environment, traction in the financial distribution business and near-term UPI market share. Maintain Neutral rating with a revised target price of Rs 870 (based on 17.7xSep’26E Ebitda).

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