In a notable demonstration of market confidence, at least six brokerage firms, both domestic and international, have assigned a ‘Buy’ rating to Paytm (One 97 Communications Ltd.). This comes despite regulatory actions concerning its associate entity, Paytm Payments Bank Ltd. (PPBL). Analysts collectively agree that these regulatory actions do not significantly affect Paytm’s core operational trajectory.

The target prices established by major firms, Bernstein, Goldman Sachs, Jefferies, Bank of America, Investec, and Emkay Global, vary between Rs 1,250 and Rs 1,500. This suggests a potential upside of approximately 31 per cent from its closing price of Rs 1,138 on the previous Monday.

A consistent observation among analysts is linked to Paytm’s separation from PPBL, which occurred nearly two years ago. The parent company, One 97 Communications Ltd., dissolved commercial ties with PPBL in March 2024, disposed of its entire investment for that fiscal year, and has not had any shared management or board representation since.

Analysts Remain Optimistic Amid Regulatory Changes

Emkay, a domestic brokerage, asserted that the regulatory developments concerning PPBL would not have any adverse financial or operational implications for Paytm. This sentiment is echoed in remarks made by Bernstein, who claimed the separation should not have any bearing on the company’s financial metrics.

Investec supports this position, noting that PPBL has had no business relationship with One 97 since the separation in March 2024, during which the latter completely wrote down its Rs 2.3 billion investment in PPBL in Q4 FY24.

As Paytm transitions away from PPBL, its attention has shifted toward growth and execution metrics. Emkay estimates a revenue compound annual growth rate (CAGR) of around 24 per cent between FY26 and FY28, underpinned by substantial opportunities in the payments and financial services sectors. Jefferies anticipates a slightly lower CAGR of 22 per cent but expects contribution margins to stabilise at between 55 and 56 per cent, with an adjusted EBITDA margin forecasted to improve to 16 per cent by FY28.

Strong Financial Performance Reflects Operational Efficiency

The positive outlook on Paytm’s financial performance is evident in recent results. For Q3 FY26, Paytm recorded revenue of Rs 2,194 crore, reflecting a 20 per cent year-on-year increase. Notably, the contribution profit rose by 30 per cent to Rs 1,249 crore, with margins extending to 57 per cent. These figures illustrate efficient operational leverage within the company’s framework.

Paytm’s growth in the payments segment is being paralleled by significant advancements in financial services. Key drivers for monetisation include lending, credit products, and the cross-selling of merchant services. Analysts have highlighted the activation of operational leverage, leading to enhanced margins and increased clarity on future earnings.

Regulatory developments are bolstering this upward trajectory. Emkay points out that obtaining the final Payment Aggregator licence in November 2025 exemplifies regulatory approval, while Goldman Sachs identifies authorisation for both online and offline merchants as a crucial avenue for growth.

Brokerage targets mirror this burgeoning confidence. Emkay and Bernstein both project a target of Rs 1,500, with Investec aligning similarly, suggesting a total return forecast of 30.1 per cent. Goldman Sachs has set a target at Rs 1,400, indicating a 22 per cent upside, while Jefferies anticipates Rs 1,350, suggesting an 18 per cent increase.

Overall, notes from the six brokerages convey a clear narrative of Paytm’s market positioning. The company is steadily advancing in the payments and financial services domains, reinforced by a substantial merchant network and an expanding market share.

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