New Delhi [India], September 19 : Paytm (One 97 Communications Limited), India's full stack merchant payments leader, is showing steady momentum across its core business of Payments, Soundbox, and Merchant Lending business, according to a recent report by BofA Global Research.
The brokerage reiterated its Neutral rating on the stock, while raising its price objective to Rs 1,290 from Rs 1,160, citing disciplined cost management and the potential of AI (artificial intelligence) to drive efficiencies.
BofA noted that Paytm, the pioneer of mobile payments, QR codes, and Soundbox, is transitioning into an AI-first company, deploying generative AI and agent-based AI to enhance processes and efficiency. The firm believes these initiatives could deliver meaningful upside as they are scaled across operations.
Paytm's EBITDA and EPS estimates have been revised upward, aided by cost cuts in marketing and employee expenses. BofA also highlighted Founder and CEO Vijay Shekhar Sharma's decision to forgo ESOPs, which further bolstered earnings. It sees scope for cost rationalisation over the next 3-5 months.
The brokerage firm also underscored the strength of Paytm's Soundbox ecosystem, which it described as a distinct competitive advantage in the merchant space.
As a first-mover, Paytm has built merchant trust while gaining access to valuable transaction data. This, according to BofA, strengthens lending capabilities and establishes a solid foundation for sustainable growth in financial services.
"We find Paytm competitively well positioned to benefit in merchant space given first mover advantage in Soundbox space & hence access to merchant data allow them to have better lending capability," said the report.
BofA also pointed out that regulatory overhangs are largely behind the company, pacing the way for investors to focus on fundamentals and long term growth.
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