Bernstein has revised its target price for Paytm's parent company One97 Communications Ltd to Rs 1,200, up from Rs 1,100, maintaining its “Outperform” rating and calling the stock “a buy for the long term.”
The upgrade follows Paytm's recent regulatory relief and established profitability, which Bernstein believes could unlock significant upside over the next few years. The brokerage said, "While we see limited scope for meaningful earnings or revenue beats versus consensus in the near term, we remain constructive given several catalysts that can drive long-term upside," noting that it remains bullish on Paytm's long-term prospects.
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Key among these is the potential reintroduction of Paytm's Buy Now Pay Later (BNPL) product. “Scaling the BNPL product back to 75% of peak volumes (2023 levels) could add 26% to our FY27E EPS estimate,” Bernstein noted. Another major upside trigger is the possible resumption of Paytm Payments Bank Ltd operations.
“This would help further reduce the regulatory overhang and improve the likelihood of further favorable approvals,” the note said. Bernstein added that a potential NBFC license “could nearly double the contribution from financial services and drive up to 70% upside to our FY30E EPS estimate.”
The reintroduction of Paytm's wallet service is also on the cards, though Bernstein expects limited earnings impact due to the rise of RuPay credit cards on UPI and UPI Lite. “However, if relaunched after Paytm secures its own PPI license, it would further ease the regulatory overhang,” the firm said.
“We remain constructive given multiple catalysts that can drive up the probability of a big upside to the long-term EPS potential, alongside Paytm's positioning as a strong proxy for investors seeking exposure to a revival in consumer credit,” Bernstein concluded.
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