Jefferies Bullish On Paytm, Hikes Target Price To INR 1,420

Brokerage firm Jefferies has reportedly raised the price target (PT) for Paytm’s parent entity One97 Communications to INR 1,420, while maintaining its BUY rating for the stock. 

“We expect EBITDA to rise from a loss of INR 1,500 Cr in FY25 to profit of INR 500 Cr in FY26 & INR 1,200 Cr in FY27. We raise our FY27-28 ests (estimates) by 9-14% led by lower opex and tad higher revenues. Upsides can arise from scale-up of postpaid and approvals for MDR on UPI and wallet. We stay with our BUY call, with a revised PT of INR 1,420 based on 45x Sep-27 EV/Adj. EBITDA,” read the brokerage note as per Economic Times.

The latest price target represents an upside of nearly 19% from the stock’s last close of INR 1,197.10 on the BSE on Monday (September 22).

Maintaining its bullishness on the stock, Jefferies reportedly attributed the higher PT to the fintech giant’s 45 Mn merchant base, the “well” performing lending business and new opportunities in postpaid-on-UPI (buy-now-pay-later offering) and wealth management products. 

The brokerage firm also noted that the company’s active consumer base, which had peaked at 100 Mn, had now “recovered to ~75 Mn, despite lower marketing spends”. As per the report, “recovery in payments and ramp-up in financial services aided revenues, and along with cost-cutting initiatives helped improve profits”.

On the fintech giant’s growth levers, Jefferies projected that the momentum in lending revenues is expected to continue, adding that Paytm is also capitalising on its existing client base for wealth management products (including trading, mutual funds, gold and margin financing where it already has a book of INR 350 Cr to INR 400 Cr).

On Paytm’s new BNPL offering, Jefferies underlined that the new product could offer significant upside, adding that “even if they (Paytm) ramp up to one-third of (the) past peak, it can provide ~7% upside to our FY27 EBITDA estimate”.

Looking ahead, Jefferies reportedly added, “We expect 24% revenue CAGR over FY25-28E, led by healthy growth in financial services (+33%) and payments (+24%). We expect contribution margins to remain stable at ~58% during the period. As operating leverage flows through, we expect EBITDA margins to improve to ~15% by FY28”.

This comes a month after another brokerage firm Bernstein raised its target price for Paytm to INR 1,200 from INR 1,100, and maintained an ‘outperform’ rating for the stock. 

The bullishness comes as the Vijay Shekhar Sharma-led company turned profitable in Q1 FY26 and posted a consolidated net profit of INR 122.5 Cr against a net loss of INR 840.1 Cr in the year-ago quarter. Paytm’s operating revenue rose 28% to INR 1,918 Cr during the quarter under review from INR 1,502 Cr in Q1 FY25. 

Other positive prospects include the fintech major recently reintroducing its BNPL offering in partnership with Suryodaya Small Finance Bank, easing regulatory challenges, a growing top line, axing ailing verticals and infusing INR 300 Cr in its investment tech subsidiary, Paytm Money. 

As a result, the stock has been on an upward spiral. Shares of the company have surged more than 37% in the past three months and are up nearly 18% on a year-to-date (YTD) basis.