Paytm shares pare early gains despite Q1 profit jump, brokerages lift target price

Shares of One 97 Communications, which operates Paytm, rose 2.5 per cent before giving up early gains on Tuesday after a sharp rise in consolidated net profit for the quarter ended June 2026. The company deferred its bonus proposal.

The stock traded 2.5 per cent lower at ₹1,313.60 on the National Stock Exchange (NSE) at 9.58 am, after rising to ₹1,382.40 from the previous close of ₹1,347.50.

The consolidated net profit after tax for the quarter ended June 2026 jumped 83 per cent to ₹220 crore, compared to ₹123 crore in the same quarter last year. Revenue from operations increased 27.6 per cent to ₹2,448 crore in the quarter under review from ₹1,918 crore in the corresponding quarter last year.

Its standalone net profit for the quarter ended June 2026 stood at ₹185 crore, as against ₹63 crore in the same quarter last year.

The board also approved an additional investment by the company, by way of subscription to the equity shares of its wholly owned subsidiary Paytm Money Ltd (PML), through a rights issue for an amount of up to ₹100 crore.

The board has approved a proposal to seek shareholders’ approval to revise the utilisation of the remaining initial public offer (IPO) proceeds. As of July 20, 2026, ₹1,686 crore of the ₹2,000 crore originally earmarked under Object 2 of the Offer for investing in new business initiatives, acquisitions and strategic partnerships remains unutilised.

Goldman Sachs has a buy rating on Paytm with a target price of ₹1,500. According to the brokerage, Paytm saw an acceleration in revenue growth in Q1FY27 and reported a meaningful beat on earnings before interest, tax, depreciation and amortisation (EBITDA), which was 20 per cent above its estimate.

Within payments, the brokerage said growth was driven by market share gains in both offline and online segments, with online growth attributed to the company’s ability to onboard new merchants starting late last year.

Karur Vysya Bank shares jump 9.6% after Q1 profit hits record ₹756 crore

Goldman Sachs also noted strong traction in merchant loan distribution and said the scale-up of consumer products such as postpaid could continue to keep revenue growth elevated. The brokerage forecasts 27 per cent y-o-y revenue growth in FY27 for Paytm, compared with 22 per cent in FY26, with EBITDA more than doubling y-o-y.

Citi has a buy rating on Paytm and raised its target raised its target price to ₹1,560. The brokerage said Q1 EBITDA at ₹200 crore beat estimates by 16 per cent, while revenue was in line with estimates and grew 28 per cent y-o-y. Contribution profits stood at 55 per cent of revenue.

According to Citi, the performance was largely supported by lower indirect costs, including cloud costs, and higher merchant loan distribution, which offset lower net payment margins from device rentals. Citi also raised its estimates.

Citi said media reports suggest merchant discount rate (MDR) on high-ticket or large-merchant Unified Payments Interface (UPI) may be introduced. According to the brokerage, a 5-7 basis points (bps) MDR for the industry may translate to a 0.5-1 bps upside to net payment margin and an 8-10 per cent upside to its FY28E EBITDA estimate.

Meanwhile, CLSA has an underperform rating on Paytm with a target price of ₹1,050 (from ₹1,000 earlier). The brokerage said Q1FY27 EBITDA of ₹200 crore was marginally ahead of its ₹190 crore estimate.

CLSA highlighted the acceleration in payments gross merchandise value (GMV) growth to 31 per cent y-o-y from the mid-20s in the preceding quarter. Financial services revenue growth also accelerated from a high-30s percentage to a mid-40s percentage during the quarter.

However, the brokerage noted that the calculated net take rate in payments moderated from 8.8 bps to 8.3 bps sequentially. With a stable contribution margin at 55 per cent, lower fixed-cost growth led to EBITDA improving from ₹130 crore to ₹200 crore sequentially.

CLSA also said operating expenses benefited from lower provision...