Paytm shares climb 5% after Q4 results. Do Jefferies and Bernstein see further upside?

Shares of One 97 Communications, the parent company of Paytm, rallied as much as 5% to their day’s high of Rs 1,166 on the BSE on Thursday after it reported a profit of Rs 184 crore for the fourth quarter, compared with a loss of Rs 540 crore in the same quarter last year.

The year-ago performance was impacted by a one-time charge linked to CEO Vijay Shekhar Sharma relinquishing his employee stock options. Revenue from operations for the quarter rose 18% year-on-year (YoY) to Rs 2,264 crore.

Paytm also reported a positive EBITDA of Rs 132 crore, versus a loss of Rs 88 crore a year earlier, though it was lower than the Rs 156 crore reported in the December quarter.

EBITDA margin came in at 6%, compared with a negative 5% in the corresponding period last year. The company said comparable EBITDA, excluding UPI and PIDF incentives, improved by Rs 330 crore year-on-year, indicating stronger underlying profitability.

Paytm shares: Should you buy, sell or hold?

Jefferies has maintained a Buy rating on Paytm with a target price of Rs 1,350, an upside of 22% from current levels. The brokerage said revenue momentum helped offset the impact of missing UPI incentives during the quarter.
The Wall Street major highlighted that revenue growth of 18% was driven by the financial services business and came despite the absence of both PIDF and UPI incentives.The brokerage added that Paytm’s strong revenue momentum could continue to support earnings even amid risks related to UPI incentives.

Bernstein has maintained its “Outperform” rating on Paytm with a target price of Rs 1,500. Looking ahead, Bernstein expects non-linear EBITDA expansion over FY26-30, driven by revenue growth of over 20% along with disciplined cost management. The brokerage further noted that indirect expenses remained well controlled, rising 3% sequentially while declining 3% YoY. Payment margin, however, fell to 9 basis points due to the discontinuation of PIDF incentives.

(Disclaimer: Recommendations, suggestions, views and opinions given by the experts are their own. These do not represent the views of The Economic Times)