Has Paytm Achieved a Profitability Breakthrough in Q4?

New Delhi, May 7 (NationPress) Paytm (One97 Communications Limited) has achieved a remarkable operational turnaround in Q4 FY25, reaching profitability at the EBITDA prior to ESOP level -- a pivotal achievement on its journey toward sustained profitability.

In response, prominent brokerages have shown optimism, increasing their price targets while emphasizing Paytm's enhancing fundamentals, rigorous cost management, and a growing merchant network.

Bernstein, which reaffirmed its Outperform rating, noted that Paytm has "reached EBITDA breakeven with PAT profitability on the horizon."

They have set a price target of Rs 1,100, indicating a potential upside of 35%. The brokerage identified several growth factors contributing to the EBITDA before ESOP profitability this quarter.

“The combination of stable payment margins, sequential growth in financial services revenue, along with a slight decline in expenses has enabled Paytm to achieve profitability on an EBITDA before ESOP basis,” the report stated.

JM Financial shared this positive sentiment, stating, “Adjusted EBITDA profitability has been reached, with PAT being the focus for the next quarter.” The firm maintained its 'Buy' rating, raising the price target to Rs 1,070.

They highlighted Paytm's expanding contribution margin and disciplined expense management as significant advantages, alongside consistent growth in merchant loans and improved collection efficiency, which are bolstering the company’s financial services sector.

Morgan Stanley, while maintaining its outlook, pointed to Paytm's “strong cost management” and revised its EBITDA forecasts upward. The firm noted management's confidence in achieving PAT profitability starting Q1 FY26 and observed that Paytm's monthly transacting users (MTUs) are recovering following recent regulatory challenges.

Citi retained its Buy recommendation with a price target of Rs 975, forecasting a 19% upside. The firm anticipates robust growth in Paytm's revenue and contribution profits, estimating a 28% and 33% CAGR over FY25-27, respectively. “Paytm’s business is in a solid position after a challenging FY25, with mostly positive triggers expected ahead,” Citi remarked.

Even among those taking a more cautious approach, there is acknowledgment of Paytm’s improving path. Goldman Sachs and UBS both recognized the company’s earnings recovery but maintained Neutral ratings, citing the necessity for clearer regulations regarding UPI monetization. Nevertheless, both raised their price targets — Goldman Sachs to Rs 705 and UBS steady at Rs 1,000 — indicating confidence in Paytm’s cost discipline and revenue recovery.

Brokerages have also pointed out several upcoming catalysts that could further accelerate Paytm’s growth, including potential UPI monetization, the reinstatement of wallet services, and ongoing merchant ecosystem expansion. Cost efficiencies are firmly established, with indirect expenses decreasing by 16% year-on-year and ESOP costs expected to significantly reduce from FY26.

With financial services revenue rising by 9% sequentially and merchant loan disbursements increasing 13% QoQ, multiple brokerages view Paytm as well-equipped to achieve profitable growth in upcoming quarters. With PAT profitability in sight, analysts are increasingly confident in Paytm’s strengthening growth trajectory.