Shares of One 97 Communications Ltd, the parent of Paytm, rose 4% on November 6 after analysts termed its second-quarter core performance healthy. The stock was also among the four companies included in the MSCI Global Standard index in its November rejig, a move likely to spur higher inflows into the stock.
The inclusion of the four Indian stocks in MSCI's Global Standard Indexes is expected to attract total inflows of about $1.46 billion, according to Nuvama.
Most brokerages raised price targets for Paytm stock on its September quarter results.
Global brokerage Citi gave a "Buy" target with target price of Rs 1,500 and said, "Strong growth and market share momentum in credit on UPI (Rupay & Postpaid) is a tailwind likely to continue to aid net payment margins ex-devices (greater than 4 bps in Q2). Citi raised estimates to 4.2 bps (3.6 bps earlier) for FY26-28E."
At 2:11 pm, Paytm shares were trading 4% higher at Rs 1,321 apiece.
"Additionally, device costs (across new device capex, refurbishment) have meaningfully declined, improving device economics. Overall, Paytm reported a solid beat on EBITDA/EBIT at Rs 180 crore/Rs 40 crore) on lower cloud costs and lower D&A. Outlook ahead on growth/EBIT margins is robust," added Citi.
Paytm's payment’s business growing close to a 20% handle Payments processing margin improved on the back of traction for credit instruments, said YES Securities, adding they maintain an ‘ADD’ rating on the stock with a revised price target of Rs 1,400 per share.
Emkay Global Financial Services retained "Buy" rating on Paytm stock and raised the target price to Rs 1,600 from the earlier Rs 1,500.
"One97 Communication (Paytm)’s Q2FY26 revenue was marginally ahead of the Street’s estimate, while profitability significantly beat expectations. Contribution profit increased 4.8% QoQ, while the decline in indirect expenses resulted in EBITDA increasing to Rs 140 crore in Q2, from Rs 72 crore in Q1FY26. Paytm is executing well on acquiring merchants by leveraging its superior Soundbox products and distributing loans to them. With low penetration of loans, we see a long growth runway for this business. On strong control over costs, we have increased our FY26E and FY27E EBITDA by 35% and 14%, respectively. The stock trades at 30x FY28E EV/EBITDA. Considering cash on the books of Rs 1,310 crore, the long growth runway for payments and financial services, and the various optionalities (such as BNPL, Wallet, scale-up of Rupay Credit Cards), we believe the risk-return is attractive," said the brokerage.
JM Financial reiterated its "BUY" rating on the stock with target price of Rs 1,470 per share.
"Paytm continued its track record of delivering better than expected profits for another quarter with PAT (adjusted for exceptional items) reaching Rs 2,110 crore. Company reported Rs 2,060 crore revenue (+7% QoQ) with contribution margin (CM) maintained at 59%, at the higher range of guidance. With payment processing margin improving both due to mix and pricing along with efficiencies in indirect expenses, Paytm delivered 320 bps rise in EBIDTAM with reported EBITDA almost doubling QoQ to reach Rs 140 crore. Though Marketing Services revenue dipped sequentially, Payments and Financial Services gained further momentum," said the domestic brokerage.
Meanwhile, global brokerage Jefferies gave a "Buy" rating for the stock and raised target price to Rs 1,600 per share.
"Paytm reported a healthy 24% YoY rise in revenues and adjusted EBITDA of Rs 180 crore, tad above estimates. PAT of Rs 21 crore was dragged by write-off of loans to gaming JV due to change in regulations. Growth in core business & ramp-up in new areas can aid 24% CAGR in revenues and expansion in EBITDA margin over FY25-28," said the brokerage.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
