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Paytm Surges: Brokerages Predict Major Earnings Growth
15 Sep
Summary
- Brokerages maintain positive ratings, raising price targets significantly.
- Paytm's merchant base and loan model projected for 25% revenue CAGR.
- Merchant lending growth and operating leverage key drivers for earnings.
Brokerages Jefferies and Bernstein have reiterated their positive outlooks on Paytm, significantly raising their target prices. Jefferies maintains a Buy rating with an increased target of Rs 2,100, foreseeing better revenue monetization from its extensive merchant base and loan-origination model.
This projection suggests a potential 25% revenue CAGR for Paytm between FY26 and FY29, with anticipated strong growth in EBITDA and profits. Jefferies also sees potential in new areas like credit on UPI and international expansion.
Bernstein retains its Outperform rating and a target price of Rs 2,200, naming Paytm a top pick. The firm expects a 24% revenue CAGR from FY26 to FY30, driven by merchant lending, which is forecast to see disbursals rise significantly.
Operating leverage is also a key factor for Bernstein, with expectations of EBITDA soaring from Rs 5 billion to Rs 70 billion by FY30. Financial services revenue is projected to grow by 27% CAGR, primarily from loan distribution.
