Target: ₹1,410

CMP: ₹1,106.85

We initiate coverage on One 97 Communication (Paytm) with ‘Outperform’ rating and TP of ₹1,410. We believe Paytm is well placed to drive the increasing adoption of retail digital payments in India owing to its market leadership position.

Its sharp focus on digitizing SME merchants improved monetization capability thereby driving strong revenue growth. There are structural levers in play to drive improvement in Paytm’s payments margin owing to rise in mix of MDR linked payment instrument and product innovation.

Its strong moat in merchant lending led by vast fleet on street should continue attract lending partners along with op. lev. benefits driving sharp uptick in core-EBITDA margin to 17 per cent by FY28e. Across most operating metric Paytm outstand peers based on our analysis. We expect core-EBITDA/PAT to rise by about 4x each over FY26-28e and ROE should improve to around 12 per cent by FY28e.

We use DCF methodology to value Paytm.

Key Risks: Paytm operates as payment aggregator, lending service provider, stock broker and insurance distributor. Each of these segments are highly regulated and any adverse regulatory development can significantly impact its normal business operations; Paytm sources merchant/consumer loans on behalf of its lending partner. Any build up of systemic stress within the overall credit ecosystem could trigger underwriting cautiousness by lenders; and Rise in competitive intensity could impair its growth outlook as well as affect margin profile

Published on April 13, 2026