Brokerages retained their positive ratings on One 97 Communications Ltd. (Paytm) after Q2FY27 results showed growth in financial services and improving margins. Brokerages also threw light on the potential impact of the UPI merchant discount rate on earnings.
Paytm's net profit for the second quarter of financial year 2027, saw a 2.7% sequential rise to Rs 226 crore, compared to Rs 220 crore in the preceding quarter. Here's what four brokerages are saying on Paytm.
Jefferies
Jefferies maintained its 'buy' rating on One 97 Communications Ltd., the operator of Paytm, with a target price of Rs 2,150, implying an upside of 29.9% from the current market price of Rs 1,654.70. The brokerage said Paytm's Ebitda margin rose sharply to 10% in the second quarter, driven by efficiencies. Profit before tax was 17% above its estimate, although profit after tax before exceptional items was in line because of higher taxes. Revenue growth was led by financial services, including loan distribution and investments.
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Jefferies said the UPI merchant discount rate, or MDR, would begin after Diwali, with management expecting revenue equivalent to 2.5 basis points of gross merchandise value. It expects strong growth to continue and Paytm to remain in the 25% compound annual growth club.
Citi
Citi retained its 'buy' rating and raised its target price to Rs 1,940 from Rs 1,560, implying an upside of 17.2% from Rs 1,654.70. The brokerage pointed to accelerating growth in financial services and an improvement in net payment margins, even excluding UPI. It said Paytm was increasing investment in technology, including artificial intelligence, as well as marketing and distribution. The distribution push includes monthly transacting user acquisition and an on-ground sales fleet. Ebitda exceeded Citi's estimates because financial services accounted for a higher share of revenue.
The brokerage also highlighted the potential impact of UPI MDR on the company's margins.
Goldman Sachs
Goldman Sachs maintained its 'buy' rating but lowered its target price to Rs 2,010 from Rs 2,070. The revised target implies an upside of 21.5% from the current price of Rs 1,654.70. The brokerage said Paytm's second-quarter performance was above expectations, with growth in revenue and market share alongside improving margins. It expects the underlying momentum to continue and estimates that the recently announced UPI MDR could increase Paytm's Ebitda by up to 40%, an impact it believes is not fully reflected in the share price.
Goldman Sachs also sees potential benefits to earnings and valuation multiples from scaling up postpaid and a possible wallet relaunch. It flagged December 2026 as the next deadline for implementing a UPI market share cap, which could be a material event for Paytm.
Bernstein
Bernstein maintained its 'outperform' rating and a target price of Rs 2,200, implying an upside of 33% from Rs 1,654.70. The brokerage said revenue momentum offset higher costs, while financial services continued to grow. It also noted an improvement in net payment margins and consumer engagement. Device additions remained strong, while marketing revenue registered an uptick.
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