New Delhi [India], July 24 : Global brokerages turned more bullish on One 97 Communications, the brand that operates digital payments major Paytm after its June-quarter results, raising target prices and describing the company as executing well in a large and profitable market.
Paytm reported first-quarter FY27 revenue of Rs24.5 billion, up 28% year-on-year and 8% sequentially. Net profit rose to Rs2.2 billion, up about 79% from a year earlier. EBITDA came in at Rs2.0 billion, up 54% quarter-on-quarter, taking the EBITDA margin to 8.3% from 5.8% in the prior quarter. Gross merchandise value grew 31% year-on-year to Rs7.1 trillion, faster than the 27% and 23% growth of the previous two quarters. Financial services revenue rose 45% year-on-year. The common thread across the notes was operating leverage and that revenue grew far ahead of costs, with indirect expenses up only about 6% year-on-year.
Investec set the highest target on the Street at Rs1,720, up from Rs1,470, and kept its Buy rating. It said that the company has achieved 'non-linear EBITDA expansion', noting that core EBITDA rose to Rs1.92 billion, roughly 10% ahead of its estimate and 57% higher sequentially. It said Paytm continued to deliver strong topline growth while executing on operating leverage, and raised its FY27 and FY28 EBITDA estimates by 5-6%.
Axis Capital raised its target to Rs1,490 and maintained Buy. It said adjusted EBITDA, excluding a payments infrastructure development fund impact, rose about 60% sequentially to Rs2.0 billion, helped by a roughly 300 basis point expansion in core EBITDA margin to 8%. It said accelerating payments growth, momentum in high-margin financial services and AI-led operating leverage improved medium-term earnings visibility, and that current valuations offered attractive risk-reward. It pointed to rising traction in postpaid, personal loans, equity broking and wealth products as a key growth driver.
Haitong International kept its Outperform rating with a target of Rs1,460. It said financial services revenue growth surprised positively and that merchant GMV growth of 32% was higher than expected, led by market-share gains. It highlighted that growth was broad-based across every business line including small merchants, large merchants, consumer payments and financial services, rather than driven by a single segment. It noted that more than half of merchant loan disbursements were to repeat borrowers, with collection trends stable.
Morgan Stanley raised its target sharply to Rs1,450 from Rs1,175. Its thesis described Paytm as executing well in a market with a very large profit pool. It said it was ahead of consensus on payment and financial-services revenue and margins for FY27 to FY29, and expects the EBITDA margin to rise to about 19% by FY29. It sees a 25% revenue growth rate over FY26 to FY29. The brokerage also said the stock's recent run had captured much of the strong execution.
JPMorgan lifted its target to Rs1,300 calling the quarter a beat across the board. It said EBITDA margins expanded handsomely, driven by continued indirect cost control, and pointed to accelerating GMV on the back of consistent Soundbox additions and higher merchant retention. It also flagged a recovering consumer payments business, with monthly transacting users rising to 80 million.
Across the notes, brokerages relayed management's confidence in reaching a 15-20% EBITDA margin over the next two to three years, driven by operating leverage and slower growth in indirect expenses. Management said financial services momentum was building across Postpaid, personal loans and wealth products. Devices deployed rose to 15.7 million and the registered merchant base grew to 50 million.
Several brokerages also flagged Paytm's in-house AI stack, tuned for Indian languages and run on its own infrastructure, which the company said was lowering costs and could become a new revenue line for merchants over time.
Paytm's cash balance stood at about Rs135 billion, net of client balances, which brokerages cited as balance-sheet strength.