Shares of One 97 Communications, the parent of Paytm, fell over 1% in early trade on Tuesday following the fintech company’s September-quarter results, but pared losses as brokerages remained bullish on the stock. Analysts cited strong growth in financial services revenue, improving operating margins and the potential earnings boost from the proposed introduction of a merchant discount rate (MDR) on Unified Payments Interface (UPI) transactions.
At the time of reporting, Paytm shares were trading 0.39% lower at ₹1,648.55, with a market capitalisation of around ₹1.05 lakh crore. The stock fell as much as 1.6% to ₹1,628 during the first hour of trade after opening 0.78% higher at ₹1,668.05.
The weakness was in sync with the broader market, with the BSE Sensex and NSE Nifty 50 trading marginally lower on weak global cues.
Q2 profit rises, operating margins improve
Vijay Shekhar Sharma-led One 97 Communications reported a consolidated net profit of ₹226 crore for the September quarter of FY27, compared with ₹21 crore in the year-ago period. Revenue from operations increased 28.5% year-on-year to ₹2,648 crore.
However, the sharp increase in reported profit partly reflected a one-time charge in the corresponding quarter last year. Paytm had reported a profit of ₹211 crore before exceptional items in Q2 FY26, but its reported profit fell to ₹21 crore after it recognised a ₹190-crore impairment on a loan to First Games Technology, its real-money gaming joint venture.
Paytm’s EBITDA nearly doubled to ₹270 crore from ₹141 crore a year ago, based on calculations from the company’s financial results. The EBITDA margin improved to approximately 10.2% from 6.8%.
The company attributed its performance to higher payment transaction volumes and values, growth in merchant subscriptions led by its Soundbox devices, and increased revenue from distributing financial services, including personal and merchant loans.
Brokerages maintain bullish outlook
Post Q2, Goldman Sachs has recommended ‘Buy’ rating on Paytm shares, although it has cut its target price to ₹2,010 from ₹2,070. The brokerage estimates that the proposed UPI MDR framework could boost the company’s EBITDA by up to 40%, a potential benefit it believes is not yet fully reflected in the stock price.
Citi has raised its target price to ₹1,940 from ₹1,560 while retaining its ‘Buy’ rating. The brokerage expects financial services revenue growth to accelerate, alongside an improvement in net payment margins.
Another foreign brokerage Bernstein has an ‘Outperform’ rating on Paytm and a price target of ₹2,200. The brokerage sees further scope for growth in financial services, supported by better payment margins and continued operating momentum.
Jefferies has also retained its ‘Buy’ call with a target of ₹2,150, pointing to operational efficiencies and the possibility of additional income if merchant discount rates (MDR) are introduced on UPI transactions.
(DISCLAIMER: The views and opinions expressed by investment experts on fortuneindia.com are either their own or of their organisations, but not necessarily that of fortuneindia.com and its editorial team. Readers are advised to consult certified experts before taking investment decisions.)