Paytm target price: Brokerage firms continue to remain positive on One 97 Communications Ltd, the parent company of fintech platform Paytm amid the potential introduction of UPI Merchant Discount Rate (MDR). They see it as a significant monetisation opportunity for Paytm and have raised price targets on the stock by 30 per cent.
Analysts tracking the stock expect MDR to be applied selectively to larger merchants and higher-value UPI transactions, while smaller merchants and consumers are likely to continue using UPI for free. Media reports indicate a possible MDR of 25-40 basis points, although the final rate, transaction threshold and revenue-sharing mechanism were yet to be decided.
However, Paytm's stock had already outperformed following MDR-related news flow, suggesting that a substantial part of the potential benefit may be priced in. Higher competition and a lower-than-expected MDR remain key risks. Bernstein recently raised its target price on Paytm to Rs 2,200, above its IPO price of Rs 2,150.
However, one should note that Paytm shares have been outperforming markets lately, largely pricing in the MDR buzz. The stock has jumped nearly 15 per cent in the last one week, while it has gained 20 per cent in the last one month. Paytm shares have rallied nearly 50 per cent in the last six months, while it has surged up to 75 per cent from its 52-week low at Rs 947.10 hit on March 30.
BofA Securities has retained its ‘Buy’ rating on Paytm, raising its price target to Rs 1,775 from Rs 1,560, citing strong momentum across its core businesses. It expects continued growth in the Soundbox business, merchant and consumer lending, and UPI market-share gains to support payments revenue. It also expects operating leverage and AI-led efficiencies to drive margin expansion.
BofA considers Paytm one of the biggest beneficiaries of introduction of MDR on select UPI transactions, estimating an 18-24 per cent upside risk to FY 28-30 EPS. BofA sees a potential wallet licence and implementation of UPI market-share caps as additional catalysts. It estimates a possible Rs 100-115 crore future EBITDA contribution from the wallet business if the licence is restored, it said.
BofA has also raised its FY28-29 EPS estimates by 11-15 per cent, reflecting improving core-business momentum, while increasing its valuation multiples for payments and financial services. The overseas brokerage has cited higher competition following UPI monetisation and a lower-than-expected MDR could limit the potential upside as key risk.
To recall, Paytm reported a 79 per cent jump in the net profit on a year-on-year (YoY) basis to Rs 220 crore, while its revenue from operations increased 28 per cent YoY to Rs 2,448 crore for the June 2026 quarter. EBITDA soared 54 per cent YoY to Rs 203 crore with margins coming in at 8.3 per cent for the quarter. Its gross merchandise value (GMV) was up 31 per cent YoY.
With the enabling amendment through Parliament, the path is open for MDR to eventually apply on UPI transactions beyond a defined threshold. This opens an earnings stream for Paytm, which it did not have access to so far, said JM Financial Ltd. It estimates incremental revenue of Rs 200 crore in FY27 and Rs 440 crore in FY28.
As the revenue carries minimal associated cost, the flow-through to profitability is high, resulting in incremental adjusted EBITDA of Rs 130 crore/Rs 410 crore in FY27E/28E, net of the UPI incentive loss. This makes overall adjusted EBITDA 8.9 per cent/17.8 per cent higher in FY27E/28E relative to earlier numbers, with margin moving up 100bps/250bps to 14.5 per cent/20.4 per cent, it said.
"Key risks to this thesis include the eventual rate settling below the 25bps assumption, a turnover threshold calibrated high enough to meaningfully narrow the eligible base, and rollout slipping beyond H2FY27," JM Financial added. We reiterate 'buy' with a revised target price of Rs 1,950 driven by 9 per cent/17 per cent increase in EPS estimates and roll forward to June 2028."