Paytm shares gain 3% after Q1 results. What are Goldman Sachs, Citi and CLSA saying?

Shares of fintech operator Paytm gained 2.7% to Rs 1,383 on the BSE on Tuesday after the company reported a 79% year-on-year (YoY) jump in consolidated net profit to Rs 220 crore for the first quarter, compared with Rs 123 crore in the year-ago period.

Revenue from operations rose 28% YoY to Rs 2,448 crore from Rs 1,918 crore. On a sequential basis, revenue increased 8% from Rs 2,264 crore in the March quarter. Total income for the quarter stood at Rs 2,630 crore, up 22% from Rs 2,159 crore a year earlier. In the previous quarter, total income was Rs 2,442 crore.

Profit before tax (PBT) came in at Rs 247 crore, compared with Rs 143 crore in the year-ago quarter and Rs 173 crore in the March quarter, indicating an improvement in operating performance both YoY and quarter-on-quarter (QoQ).

Also read: Paytm remains majority Indian-owned for 2nd consecutive quarter

Paytm share price: Buy, sell or hold?

Citi has maintained its Buy rating on Paytm and raised its target price to Rs 1,560 (16% upside) from Rs 1,425, implying an upside of over 15% from the current market price. The brokerage said Paytm’s Q1 EBITDA exceeded its estimates by 16%, driven by lower cloud costs and higher merchant loan distribution. It has raised its FY27 and FY28 EBITDA estimates by 2% and 6%, respectively, while retaining its valuation multiple of 60x March 2028 estimated EV/EBIT. Citi added that any implementation of UPI MDR could provide further upside.

Goldman Sachs has reiterated its Buy rating on Paytm and increased its target price to Rs 1,500 (11% upside) from Rs 1,430, implying an upside of over 11% from the current market price. The brokerage cited stronger revenue growth and improving profitability, noting that revenue rose 28% YoY in Q1 while EBITDA margin expanded to 8.3% from 5.8% in Q4.
Goldman Sachs also highlighted market share gains in both online and offline payments, continued strength in merchant loan distribution, and the potential implementation of UPI MDR as key growth drivers. It has also raised its FY27-FY29 revenue and EBITDA estimates.

Read more: Samir Arora-backed Helios Mid Cap Fund adds Groww, 4 more stocks; hikes stake in Paytm and 29 othersCLSA has maintained its Underperform rating on Paytm with a target price of Rs 1,050 (22% downside). The brokerage noted that Paytm Payment Services has applied for a wallet licence but trimmed its FY27-FY29 EBITDA estimates by 2-3% due to expectations of higher operating expenses. It added that the recent rally in the stock, driven by expectations of the return of UPI MDR, leaves little upside even if the policy is implemented.

Paytm calls off first-ever bonus issue proposal

One 97 Communications, the parent of fintech platform Paytm, has decided not to move ahead with its proposed maiden bonus share issue for now, choosing instead to prioritise business expansion and profitability to enhance long-term shareholder value.

The proposal was discussed by the company’s board at its meeting on July 20, but the directors decided not to proceed with it “at this time”, according to a stock exchange filing. The company added that it may revisit the proposal at a later stage.

Paytm had informed the stock exchanges on July 15 that its board would consider a bonus issue along with the financial results for the April-June quarter. However, it had not announced a bonus ratio or record date. If approved, it would have marked the company’s first bonus issue since its listing in November 2021.

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