Key Points

According to Bernstein, “Paytm has shown remarkable resilience, recovering from the regulatory actions of early 2024 to once again near break-even,” with the report noting that many concerns around the sustainability of its business model have now been addressed.

Bernstein outlines a base-case scenario where Paytm’s EPS is projected to grow non-linearly from Rs 1.5 in FY26E to Rs 70 by FY30E, backed by strong revenue growth and tight cost control.

The report forecasts revenue to grow at a 22 per cent CAGR over FY25–30, while total costs are expected to rise at just 13 per cent CAGR, with indirect expenses limited to 10 per cent CAGR. A major driver of this growth is the high-margin lending business, where merchant and personal loan volumes are expected to grow 3.6 times from FY24 levels.

Despite headwinds on the consumer side, Bernstein observes that Paytm’s merchant-side UPI share remains stable, contributing meaningfully to payments revenue. The report identifies key catalysts for further upside including the potential approval of a Payment Aggregator license, the revival of Paytm Payments Bank (PPBL), and the possible reintroduction of wallet and Buy Now Pay Later (BNPL) products.

The report also describes Paytm’s merchant business as robust, with fee-paying merchant numbers and loan volumes now exceeding pre-regulatory levels. Bernstein attributes the company’s near-term profitability outlook to aggressive cost discipline, particularly through a sharp reduction in indirect expenses.

While acknowledging that the consumer segment is still recovering from the withdrawal of the wallet and BNPL offerings, Bernstein expects marketing revenues to grow at a 15 per cent CAGR, driven by a gradual rebound in Monthly Transacting Users (MTUs).

Finally, the report notes that Paytm’s stock has already appreciated 103.5 per cent over the past 12 months, and reiterates confidence in the company’s trajectory, calling it “well-positioned for a strong comeback.”

- IANS