Mumbai (Maharashtra) [India], October 9 : JM Financial Institutional Securities has reiterated its Buy rating on Paytm and raised the 12-month target price to Rs 1,420 from Rs 1,320, citing continued profitability, higher operating leverage and improved efficiency across the fintech's businesses.
According to the brokerage's latest Internet Sector Preview, Paytm's revenue is expected to grow around 7 per cent quarter-on-quarter and 23 per cent year-on-year, supported by steady expansion in its payments and financial services segments. JM Financial forecasts 27 per cent year-on-year GMV growth and a 6 per cent sequential increase in merchant subscribers to 13.8 million as the company focuses on both new sign-ups and reactivation of dormant merchants.
The report highlights that loan disbursals are projected to rise 9 per cent quarter-on-quarter (about 27 per cent YoY), mainly from merchant lending, while personal-loan growth remains measured amid tighter unsecured-credit norms. Revenue from financial services is expected to climb 6 per cent sequentially, with marketing-services revenue likely to increase 9 per cent.
JM Financial notes that Paytm's flattish fixed-cost base is creating strong operating leverage, enabling EBITDA-margin expansion of 170 basis points quarter-on-quarter. The brokerage expects the company to remain PAT-positive for the quarter, adding that profitability is being sustained by disciplined cost management and consistent contribution margins.
The research points to a positive regulatory development as well: the in-principle approval for Paytm Payments Services Ltd. (PPSL), which "lifts the ban on onboarding new merchants and could be the precursor to further regulatory clearances for Paytm." JM Financial said this progress strengthens visibility on Paytm's long-term growth trajectory.
Looking ahead, the brokerage expects recovery in the unsecured-lending environment and *better operating leverage driven by higher operational efficiency. It has raised EBITDA estimates by 1-2 per cent for FY26-28 and projects Paytm's revenue to reach Rs 86,631 crore in FY26, growing at a 24 per cent CAGR through FY28, with PAT rising at a 70 per cent CAGR over the same period.
JM Financial summarised its stance by saying it "remains constructive on Paytm," citing its continued profitability, efficient cost structure and regulatory clarity as key drivers. The revised target price of Rs 1,420 implies an upside potential of nearly 16 per cent from the current market price.
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