Jefferies Upgrades Paytm to ‘Buy’; Shares Jump 3.5% To Touch Fresh 52-Week High

Brokerage firm Jefferies has upgraded its rating on Paytm from ‘hold’ to ‘buy’, raising its target price, a day after the fintech major turned profitable in the first quarter of FY26. 

With this, Paytm shares surged 3.5% to INR 1,090.00 on the BSE today, touching a fresh 52-week high. The stock opened at this price but later slipped to INR 1,019.35 apiece. 

As of 12:30 PM, the stock was trading 1.8% higher at INR 1,072.15 on the BSE with a market capitalisation of INR 68,150.21 Cr.

Jefferies raised its target price for Paytm to INR 1,250 per share from INR 900 before, an upside of 19% from the previous closing price of INR 1,051 per share.

The brokerage noted that the company has rebounded strongly from previous regulatory and business setbacks by controlling costs and rebuilding growth momentum.

Paytm turned profitable in Q1 FY26, reporting a net profit of INR 122.5 Cr compared to a net loss of INR 840.1 Cr in the year-ago quarter. The company attributed the profitability to “AI-led operating leverage, a disciplined cost structure,” and higher other income.

Its revenue from operations rose 28% year-on-year to INR 1,918 Cr during the quarter, compared to INR 1,502 Cr in the same quarter last year.

Jefferies Outlook For Paytm

In its note, Jefferies projected that Paytm’s EBITDA margin could improve from –22% in FY25 to +9% in FY27 and 14% in FY28, reflecting a significant turnaround in profitability.

“We raise EBITDA estimates for FY26-28, led by tad higher contribution margins/operating leverage. Upgrade to FY26 looks steeper due to some transitionary benefits, and upgrades to FY27-28 EBITDA are around 14-17%,” the brokerage firm said.

Jefferies is also expecting 24% net revenue CAGR growth in Paytm over FY25-28E, driven by a 32% growth in financial services and 24% growth in payment services during the same period. 

The brokerage also highlighted that Paytm’s stock has increased ~20% in the last month as its business outlook has improved and there is potential for inclusion in MSCI indices, which could attract more institutional investment. 

However, it noted that Paytm’s valuation still trades at a ~30% discount compared to PB Fintech.

Jefferies also outlined three potential future growth drivers for Paytm- securing approval for a Payment Aggregator (PA) licence, resuming and expanding its BNPL (Buy Now Pay Later) and wallet businesses and applying MDR (merchant discount rate) on UPI payments.

However, the latest development around MDR was that the finance ministry last month dismissed reports about the possible introduction of a merchant discount rate (MDR) on unified payments interface (UPI) transactions. Paytm shares tumbled 10% in a day after this announcement. 

A Brief History Of Paytm Stock

Paytm entered the public market in November 2021 with an issue price that had an upper band of INR 2,150. Its shares were listed on the National Stock Exchange (NSE) at a 9% discount to the upper price band at INR 1,955.

Post debut, Paytm’s share price continued to slide, reflecting investor scepticism about its profitability, high valuation, and broader market volatility that impacted tech stocks. 

In January 2024, after the Reserve Bank of India’s (RBI) crackdown on Paytm Payments Bank, which raised concerns over the company’s compliance and business continuity, its shares plunged to an all-time low of INR 377 on June 12, 2024.

However, the company managed to stage a turnaround. By December 2024, Paytm shares had hit its previous 52-week high of INR 1,062.95. Today, after the strong Q1 FY26 result, it marked its fresh 52 week high.