SYNOPSIS:
Axis Capital upgraded Paytm to “buy,” raising its target price to Rs. 1,500, citing improved margins, stronger financial services growth, and regulatory clarity, with EBITDA margins expected to reach 15 percent by FY28.
Shares of India’s full-stack merchant payments leader, serving MSMEs and enterprises, and a leading mobile payments and financial services distribution company are in focus on the stock exchanges, following Axis Capital’s upgrade to “buy” rating on the stock, implying a potential upside of about 18 percent from current levels.
With a market cap of Rs. 81,486 crores, shares of One 97 Communications Limited were trading in the green at Rs. 1,275 on BSE, up by around 2.5 percent, as against its previous closing price of Rs. 1,244.35. The stock has delivered positive returns of around 75 percent in the last one year, and has gained by nearly 4 percent in a month.
Brokerage Target & Outlook
Domestic brokerage firm Axis Capital has upgraded the rating of One 97 Communications Limited (Paytm) to “buy” from its earlier “reduce” recommendation, while raising its target price by 58 percent, from Rs. 950 to Rs. 1,500 per share, representing a potential upside of nearly 18 percent from the current price levels.
The brokerage noted that major merchant payment players are entering a strong earnings growth phase, driven by a favourable pricing environment across online and offline merchants, improving margins, stabilisation in UPI’s share of Gross Merchandise Value, and a growing contribution from credit-linked products. This is supported by a clear regulatory framework and longstanding merchant relationships.
Paytm’s strategic focus has shifted from consolidation to expansion, with new investments being made in innovative products and frontline personnel to drive growth.
Axis Capital also raised its EBITDA forecasts for Paytm for FY27 by 33 percent and for FY28 by 46 percent, reflecting stronger payment margins, scaling of financial services, and disciplined operating expenditure. The brokerage expects Paytm’s EBITDA margins to rise to 15 percent by FY28, up from 3.7 percent in Q1 FY26.
Further upside could come from non-linear growth drivers such as MDR on UPI and the ramp-up of Buy Now, Pay Later (BNPL) services. However, the brokerage highlighted that deterioration in asset quality in the lending segment remains a key risk.
In addition, a more structured regulatory environment – including regulations for payment aggregators, merchant KYC, and the Default Loss Guarantee (DLG) model – is expected to enhance ecosystem participation and support overall growth.
Financials & More
Paytm reported a significant growth in its revenue from operations, showing a year-on-year increase of around 28 percent from Rs. 1,502 crores in Q1 FY25 to Rs. 1,918 crores in Q1 FY26. Similarly, the company achieved a strong turnaround, shifting from a net loss of Rs. 840 crores in Q1 FY25 to a net profit of Rs. 122 crores in Q1 FY26.
One 97 Communications Limited is engaged in the business of providing a) payment and financial services which primarily includes payment facilitator services, facilitation of consumer and merchant lending to consumers and merchants, wealth management etc. b) marketing services which primarily consists of aggregator for digital products, ticketing business, providing voice and messaging platforms to the telecom operators and enterprise customers and other businesses, etc.
The company owns and operates the brand “Paytm”. Paytm is India’s leading mobile payments and financial services distribution Company, offering consumers and merchants a comprehensive suite of payment services.
Written by Shivani Singh
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