Paytm's September quarter performance saw an improvement in revenue, profitability, and margins, while its focus on higher quality business and growth in financial services distribution remained key themes for brokerages. Nomura raised its target price, Jefferies reiterated its positive view, and Bank of America retained a Neutral stance.
Paytm Q2 Results Highlights
- Net profit rose 2.7% sequentially to Rs 226 crore from Rs 220 crore.
- Revenue grew 8.2% to Rs 2,648 crore from Rs 2,448 crore.
- Ebitda increased 33% to Rs 270 crore from Rs 203 crore.
- Ebitda margin widened to 10.2% from 8.3%, an expansion of 190 basis points.
- The board approved investments of Rs 500 crore each in Paytm Cloud Tech and its Singapore arm.
- Management expects payment processing margins to improve by 2.5 basis points after UPI MDR implementation, with the impact expected to stabilise over two to three quarters.
Also Read: Paytm Q2 Results: Profit Clocked For 6th Straight Quarter, Revenue Tops Rs 2,600 Crore
Brokerage Views On Paytm
Nomura: Buy | Target Price: Rs 2,300
- Nomura raised its target price to Rs 2,300 from Rs 2,250, with the potential for UPI merchant discount rate income to exceed its earlier estimates.
- The brokerage sees financial services distribution gaining traction as Paytm shifts away from lower-quality gross merchandise value.
Jefferies: Buy | Target Price: Rs 2,150
- Jefferies retained its Rs 2,150 target price, pointing to the strength of Paytm's business franchise and its growth potential.
- The brokerage expects the company to be among businesses delivering 25% compound annual growth.
- The brokerage also pointed to monthly transacting users increasing by 5 million during the quarter.
- Jefferies also noted that Paytm has cut unprofitable gross merchandise value while expanding its workforce to support growth.
- The stock remains one of the brokerage's top picks.
Bank of America: Neutral | Target Price: Rs 1,850
- Bank of America lowered its target price to Rs 1,850 from Rs 1,900, despite seeing steady business momentum and several growth opportunities.
- The brokerage expects a 2.5 basis point improvement in payment processing margins to add Rs 900 crore to Ebitda in fiscal 2028.
- This estimate does not factor in potential platform fees on the issuing or acquiring side.
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