Paytm's ongoing expansion in merchant payments is helping ease investor concerns about intensifying competition in India's digital payments sector, global brokerage Bernstein said in a note on 27 October 2026, reiterating its 'Outperform' rating on the fintech firm with a target price of ₹2,200 — implying roughly 33% upside from the 26 October closing price.

Merchant Expansion Holds Steady

Bernstein's assessment, based on Paytm's Q2 FY27 results, highlighted the addition of approximately 7 lakh merchant devices during the July–September quarter — consistent with the company's recent quarterly run rate. The brokerage said sustained device additions were a key factor alleviating anxiety around competitive intensity in the payments space.

Paytm's total merchant device network now stands at 1.64 crore, reflecting deepening penetration among businesses across the country. This steady expansion is notable at a time when rivals including banks and wallet players have stepped up their own merchant acquisition drives.

Consumer Engagement Picks Up

Beyond the merchant side, Bernstein flagged a sharp pickup in consumer activity as another positive signal. Monthly transacting users rose by 50 lakh sequentially and by 1 crore year-on-year, reaching 8.5 crore — suggesting that Paytm is not only retaining its existing base but also drawing in incremental users despite a crowded market.

Financial Performance: Revenue Up 28%, EBITDA Surges 90%

Paytm's financials for the quarter showed improving operating leverage. Revenue grew 28% year-on-year to ₹2,648 crore, while EBITDA jumped 90% to ₹270 crore. Indirect expenses, though higher in absolute terms, fell as a share of revenue — dropping from approximately 52% a year earlier to about 46% — indicating that the cost base is scaling more slowly than the top line.

Payments monetisation also improved, with net payment margins widening from 8.5 basis points to 9.1 basis points. Net payment revenue rose 7% sequentially even as payment GMV remained flat quarter-on-quarter, pointing to better yield on existing transaction volumes.

Financial Services and Marketing Drive Diversification

Two other segments added to the positive picture. Financial services revenue climbed 49% year-on-year and 12% sequentially, underscoring Paytm's push to monetise its payments user base through credit and insurance products. Marketing services revenue expanded 26% year-on-year and 20% quarter-on-quarter — a meaningful recovery after several quarters of stagnation in that vertical.

What This Means for Investors

Bernstein's maintained Outperform call and ₹2,200 price target reflect a view that Paytm's structural metrics — merchant reach, consumer engagement, and payments yield — are trending in the right direction. The brokerage did flag rising operating expenses as a factor to monitor, but noted that the trajectory of operating leverage offsets the near-term cost pressure. With competitive pressure from UPI-centric rivals and bank-backed wallets unlikely to ease, how durably Paytm can sustain this merchant and consumer momentum will be closely watched in the quarters ahead.