What Is Bernstein's Rs 1,100 Price Target for Paytm?
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Synopsis
In a recent report, Bernstein has set an ambitious price target for Paytm, forecasting significant growth and profitability. With a detailed outlook on revenue and cost management, Bernstein's analysis highlights Paytm's resilience and market position, making it a compelling read for investors.
Key Takeaways
- Target Price: Rs 1,100, indicating a 27% upside.
- EPS Growth: Projected to rise from Rs 1.5 to Rs 70 by FY30E.
- Revenue Growth: Expected at 22% CAGR from FY25-30.
- Cost Control: Total costs to increase at just 13% CAGR.
- Market Position: Paytm is poised for a strong comeback.
New Delhi, June 19 (NationPress) The esteemed global investment firm Bernstein has recently published a research report entitled 'Paytm: What Do You Need to Believe Now?', in which it has reaffirmed an 'Outperform' rating for One97 Communications Ltd (Paytm). The firm has set a target price of Rs 1,100, indicating a potential upside of 27 percent from current market levels.
Bernstein highlights that Paytm has demonstrated impressive resilience, bouncing back from the regulatory challenges faced in early 2024 and approaching break-even once more. The report also mentions that many of the concerns regarding the sustainability of its business model have been effectively addressed.
The report lays out a base-case scenario where Paytm’s EPS is expected to grow non-linearly from Rs 1.5 in FY26E to Rs 70 by FY30E, fueled by robust revenue growth and meticulous cost management.
Projected revenue growth is anticipated at a 22 percent CAGR for FY25–30, while total costs are expected to increase by only 13 percent CAGR. Indirect expenses are likely to stay limited to 10 percent CAGR. A significant contributor to this growth is the high-margin lending sector, where both merchant and personal loan volumes are forecasted to expand 3.6 times from FY24 levels.
Despite challenges on the consumer front, Bernstein notes that Paytm’s share in the merchant-side UPI remains stable, providing a substantial contribution to payment revenues. Key catalysts for further growth include the potential granting of a Payment Aggregator license, revitalization of Paytm Payments Bank (PPBL), and the possible reintroduction of wallet and Buy Now Pay Later (BNPL) products.
The report describes Paytm’s merchant business as strong, with the number of fee-paying merchants and loan volumes surpassing pre-regulatory levels. Bernstein credits the company’s near-term profitability outlook to rigorous cost discipline, especially through a significant reduction in indirect expenses.
While it recognizes that the consumer segment is still in recovery due to the withdrawal of wallet and BNPL services, Bernstein anticipates marketing revenues to grow at a 15 percent CAGR, driven by a gradual increase in Monthly Transacting Users (MTUs).
Finally, the report notes that Paytm’s stock has appreciated 103.5 percent over the last year, reinforcing confidence in the company's trajectory, which is deemed “well-positioned for a strong comeback.”
Point of View
I believe that Bernstein's analysis of Paytm reflects a growing confidence in the fintech sector's recovery. Their findings highlight essential strategies that Paytm employs to navigate challenges, ensuring that investors stay informed about potential opportunities.
NationPress
19/06/2025
Frequently Asked Questions
What is Bernstein's target price for Paytm?
Bernstein has set a target price of Rs 1,100 for Paytm, indicating a potential upside of 27% from current levels.
How has Paytm's EPS been projected to grow?
Bernstein projects Paytm’s EPS to grow non-linearly from Rs 1.5 in FY26E to Rs 70 by FY30E.
What factors contribute to Paytm's growth?
Key growth factors include strong revenue growth, tight cost control, and expansion in the high-margin lending business.
What are the main risks for Paytm?
The consumer segment is still recovering from the withdrawal of wallet and BNPL offerings, which poses challenges.
How has Paytm's stock performed recently?
Paytm’s stock has appreciated by 103.5% over the past 12 months, showcasing investor confidence.
