A major step toward long-term profitability, Paytm (One97 Communications Limited) achieved profitability at the EBITDA before ESOP level in Q4 FY25, marking a strong operational turnaround.
Leading brokerages have reacted favorably to this, increasing their price targets and praising Paytm’s growing merchant ecosystem, sharp cost reduction, and strengthening fundamentals.
In keeping with its Outperform rating, Bernstein claims that Paytm has “achieved EBITDA breakeven with PAT profitability in sight.”
A possible 35% increase is implied by Bernstein’s price objective of Rs 1,100. The firm ascribed this quarter’s EBITDA before ESOP profitability to a couple of growth drivers.
According to the brokerage’s analysis, “Paytm turned profitable on EBITDA before ESOP basis due to a combination of stable payment margins, sequential growth in financial services revenue, and a marginal decline/stable expenses line.”
“Adjusted EBITDA profitability achieved, PAT in focus next quarter,” said JM Financial, echoing this optimism. The company’s price objective was lifted to Rs 1,070, and it kept its “Buy” rating.
Along with consistent growth in merchant loans and increased collection efficiency, it highlighted Paytm’s contribution margin improvement and disciplined expense control as major advantages that are bolstering the company’s financial services division.
Morgan Stanley increased its EBITDA projections and cited Paytm’s “strong cost control” while retaining its opinion. The company stated that Paytm’s monthly transactional users (MTUs) are already rebounding from recent regulatory setbacks, and it emphasized management’s confidence in attaining PAT profitability beginning Q1 FY26.
Citi maintained its buy recommendation with a 19% upside projection and a price objective of Rs 975. It projects a 28 percent and 33 percent compound annual growth rate (CAGR) for Paytm’s revenue and contribution earnings over FY25–27, respectively, to expand at a strong rate. According to Citi’s assessment, “Paytm’s business is in sound shape after a challenging FY25, with mostly positive potential triggers ahead.”
There is acknowledgement of Paytm’s increasing trajectory even among those who are taking more cautious positions. Despite acknowledging the company’s profitability turnaround, UBS and Goldman Sachs have kept their ratings at neutral, stressing the need for further regulatory certainty around UPI monetization. Both companies, however, increased their price estimates, with UBS staying at Rs 1,000 and Goldman Sachs going up to Rs 705, indicating confidence in Paytm’s cost control and revenue recovery.
Brokers have identified a number of impending catalysts that would hasten Paytm’s expansion. These consist of the reintroduction of wallet services, the possible monetization of UPI, and the ongoing growth of the merchant ecosystem. With ESOP costs expected to drop significantly from FY26 and indirect expenses down 16% year over year, cost reductions are now firmly established.
Paytm is viewed by a number of brokerages as being well-positioned to generate profitable growth in the upcoming quarters, with financial services revenue increasing by 9% sequentially and merchant loan disbursals increasing by 13% QoQ. As PAT profitability approaches, analysts’ confidence in Paytm’s improving growth trajectory grows.
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