Paytm shares surge 7% from day's low as firm swings into black in Q1; should you buy, sell or hold?

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26 Aug, 2025 12:21

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The shares of One 97 Communications, the parent company of Paytm, sharply rebounded from its day's low on July 23. This comes despite the company reporting a net profit of Rs 123 crore for the first quarter of the financial year 2026, as against a net loss of Rs 839 crore a year ago.

This was the first operationally-driven quarterly net profit reported by the firm since listing. It also reported a positive EBITDA of Rs 72 crore in Q1 FY26, as against an EBITDA loss in both Q4 FY25 and Q1 FY25. Its revenue from operations meanwhile surged 28 percent on-year to Rs 1,917.5 crore.

Paytm said that the rise in its operating revenue came on the back of increase in number of subscription merchants, higher GMV and growth in revenues from distribution of financial services. "EBITDA and PAT turned profitable at ₹72 Cr (margin of 4%) and ₹123 Cr respectively, demonstrating AI-led operating leverage, disciplined cost structure and higher other income," the firm said.

Jefferies upgraded its rating of Paytm shares to 'Buy', and raised its target price for the stock to Rs 1,250 per share. This implies an upside potential of nearly 19 percent from the previous closing price of Rs 1,051 per share.

The international brokerage said that the firm's Q1 EBITDA was ahead of its estimates due to lower DLG cost and operational leverage. It expects the firm to see continued profit growth from rise in revenue and operating leverage.

According to Jefferies, Paytm's valuation is still at a discount to that of Policybazaar-parent PB Fintech, hence there is scope for compounding returns.

Citi kept a 'Buy' call on Paytm, and hiked its target price for the stock to Rs 1,215 per share. This implies an upside potential of nearly 16 percent from the previous closing price.

The brokerage said that the firm's Q1 results were driven by cost efficiencies and non-DLG profit contribution. Merchant business is performing well, and consumer business recovery is underway, it added.

Bernstein kept an 'Outperform' rating on Paytm shares, with a target price of Rs 1,100 per share. This implies an upside potential of nearly 5 percent over the stock’s previous closing price.

The international brokerage noted that the firm's net profit was achieved without one-offs, driven by ESOP cost reduction and marketing strategies. It noted that future profitability is dependent on sequential revenue growth.

The shares of the company were down 1.9 percent to trade at Rs 1,031 apiece, as seen as 9.45 am. The shares later surged 7 percent from its day's low to hit an intraday high of Rs 1,089 apiece in the afternoon.

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