Ventura Securities has reiterated its bullish stance on One 97 Communications Ltd (Paytm), projecting an 84% increase in the stock over the next two years. The brokerage has set a DCF-based target price of Rs 2,074, compared to the current market price of Rs 1,127, citing the fintech major's ability to maintain profitability, accelerate revenue growth, and strengthen its merchant ecosystem.

Key Highlights

• Ventura Securities projects an 84% upside for Paytm, targeting ₹2,074 in 24 months.
• Paytm's strategic focus on profitability and merchant ecosystem growth drives investor optimism.

Paytm has shifted its focus to profitability through operational and strategic changes since Ventura's coverage began in August 2024. The company's merchant base increased from 4.07 crore in Q1FY25 to 4.5 crore in Q1FY26, and its payment GMV increased from Rs 4.21 lakh crore to Rs 5.34 lakh crore. Device penetration in the merchant base increased to 1.3 crore from 1.09 crore, indicating a recurring revenue stream.

According to Ventura, Paytm has also relaunched Paytm Postpaid in partnership with Suryoday Small Finance Bank and powered by NPCI, with the goal of capitalizing on high-margin financial services opportunities. Its UPI market share increased to 7.3% in Q1FY26 from 7% the previous year, while UPI person-to-merchant (P2M) share increased to 20.9% from 20.4%.

Ventura expects Paytm's monthly transacting users and subscription-paying device merchants to increase from 7.4 crore and 1.3 crore in Q1 FY26 to 9.5 crore and 2.2 crore, respectively, by FY28E. Payment GMV is expected to nearly double from Rs 18.7 lakh crore in FY25 to Rs 33.9 lakh crore by FY28E.

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Ventura expects Paytm's revenue and contribution profit to grow at a CAGR of 27.3% and 30.8%, respectively, in FY25-28. Contribution margins are expected to increase to 57.8 percent from 53.2%. Paytm's post-ESOP Ebitda improved in Q1FY26, and Ventura expects post-ESOP Ebitda of Rs 2,164 crore and net profit of Rs 2,138 crore by FY28E, a significant turnaround from FY25 losses.

"Paytm's current market price is 33.6x its FY28 P/E. "Our target implies 61.8x FY28 P/E and an 84% upside," Ventura stated, citing AI-driven operating leverage, disciplined cost structures, and expanding financial services as growth catalysts.