Paytm shares jump 3% today after brokerage Bernstein’s update. Should you buy?

Shares of One97 Communications Limited, Paytm’s parent company, gained in early trade after global brokerage Berstein’s latest price target update. At 10 am on the Bombay Stock Exchange (BSE), Paytm shares were up 2.74% to Rs 868.80.
Bernstein has raised its target price from Rs 750 to Rs 1,000, reaffirming an ‘Outperform’ rating. The update reflects growing confidence in the fintech firm’s prospects, with the global brokerage firm projecting significant earnings growth under a favourable scenario.
The brokerage highlighted a shift in market sentiment, with discussions moving from Paytm’s survival to its long-term growth potential. It sees a ~100% upside in earnings per share (EPS) under a bull-case scenario, driven by factors such as a recovery in payment processing margins, regulatory changes, and lending expansion.
It highlighted that Paytm’s payment margins, currently at 10 basis points (bps) due to regulatory actions, could recover to 15 bps as products like wallets and credit-linked UPI gain traction. This margin revival could alone add 25% to Paytm’s EPS.
The brokerage also noted that regulatory measures to cap the market dominance of rivals like PhonePe and Google Pay could help Paytm reclaim a larger share of UPI transactions. Bernstein expects this shift to add 8% to EPS, alongside a 25% compound annual growth rate in GMV through FY30.
Another growth avenue lies in lending. If Paytm channels more loans through its own balance sheet, supported by an NBFC license, it could improve profitability while reducing regulatory risks, potentially boosting EPS by 30%.
However, Bernstein cautioned that the success of this outlook depends on favourable regulatory changes and management’s willingness to deepen lending operations.
Paytm recently reported a consolidated profit of Rs 928.3 crore in Q2 FY25, marking a recovery from a loss of Rs 290.5 crore in the same period last year. This profit was driven by a one-time exceptional gain of Rs 1,345 crore from the sale of its ticketing business to Zomato. However, revenue fell 34% year-on-year to Rs 1,660 crore.
With shares up 34% this year and 136% in six months, Paytm’s growth potential continues to attract investor interest, although challenges remain.
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