Broker’s call: Paytm (Buy) – The HinduBusinessLine

FILE PHOTO: A smartphone with the Paytm logo is placed on a laptop in this illustration taken on July 14, 2021. REUTERS/Dado Ruvic/Illustration/File Photo
| Photo Credit:
Dado Ruvic

Target: ₹1,450

CMP: ₹1,286.35

Our positive stance on One 97 Communications (Paytm) remains intact on the back of its significant earnings growth potential, stemming from: likely growth in payments and loan distribution; margin expansion prospects from a combination of product upgrades, improving UPI mix towards chargeable products, savings initiatives and operating leverage; and presence of optionality through possible offerings, including traction in postpaid/wallet/international complemented by its diverse presence across the payment ecosystem. Given these levers, we consider risk-reward as favourable.

There is also better success now in terms of product innovations, customer/merchant retention and free cash flow maximisation.

We arrive at PAT (including ESOPs) of ₹610 crore/₹1,530 crore/₹2,230 crore in FY26/27/28E. FY26E PAT includes one-time impairment of INR 1.9bn of loan to First Games Technology Pvt. Ltd. done in Q2FY26 and impairment of ₹17 crore done in Q1FY26. Adjusted for these, FY26E PAT stands at ₹820 crore.

We now value Paytm basis 40x multiple as we roll forward to FY28E EBITDA of ₹2,150 crore. We add cash of ₹13,000 crore and arrive at a TP of ₹1,450 (earlier ₹1,240) basis diluted shares of 67.8mn.

Risks: Less-than-expected growth in GMV (factoring in FY25–28E GMV CAGR of about 23 per cent) and financial services revenue (baking in FY25–28E CAGR of 25.8 per cent).

Published on November 26, 2025