Dolat Capital maintains 'buy' rating on Paytm stock, sees up to 30% upside

Dolat believes Paytm is on track to achieve adjusted EBITDA breakeven by Q4FY25 (excluding UPI incentives), with positive cash flow expected

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26 Aug, 2025 12:21

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Dolat Capital has maintained buy rating on Paytm owner One97 Communications Ltd and increased target price by 30 percent to Rs 920 a share from current market price.

At 11:05 am on October 1, Paytm's shares on BSE were trading over 2 percent higher at Rs 704.65 apiece.

Dolat Capital noted that over the past three months, several key developments suggest easing challenges and improving prospects across business segments. These include the completion of Paytm handle migration, clearance of regulatory hurdles with FDI approval for the Payment Aggregator (PA) license, stable market share as indicated by UPI consumer data, and a growing partner network in financial distribution.

Dolat believes Paytm is on track to achieve adjusted EBITDA breakeven by Q4FY25 (excluding UPI incentives), with positive cash flow expected. The business is resilient and positioned for strong growth.

"We have realigned our FY25/FY26 estimates considering improving biz. prospects and divestiture of events business for Rs 2,000 crore," Dolat Capital said in its latest note.

Dolat stated that Paytm is set for recovery following disruptions from PPBL and Postpaid impacts. Despite challenges, Paytm benefits from a wide range of use cases, a large customer base (78+ million MTUs, 150 million ATUs), and a strong tech platform. The company is well-positioned to capitalize on India's rapid growth in digital payments.

Dolat believes Paytm has the potential for significant revenue growth over the next decade and expects steady profit growth starting from FY26. Dolat views DCF valuation as the best method to capture the business's long-term potential.

Dolat projects Paytm’s growth in two stages: a revenue CAGR of 28% from FY25 to FY30, and a revenue CAGR of 18% from FY30 to FY40. The company is expected to achieve PAT profitability by FY26, with a steady EBIT margin of ~16.1% from FY31 to FY40. Dolat's DCF model assumes a 12% cost of capital and a terminal growth rate of 2% beyond FY40, the report added.

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