Paytm Shares Surge 5% Post-Q4 Results: Analysts Weigh in on Potential Upside from Jefferies and Bernstein.

Shares of One 97 Communications, the parent company of Paytm, witnessed a significant rally of up to 5%, peaking at Rs 1,166 on the Bombay Stock Exchange (BSE) following the announcement of its fourth quarter earnings. The company reported a net profit of Rs 184 crore, a remarkable turnaround from a loss of Rs 540 crore in the same quarter of the previous year. This positive performance was notably influenced by the previous year’s results, which were adversely affected by a one-time charge associated with CEO Vijay Shekhar Sharma’s relinquishment of his employee stock options. The quarter also saw an 18% year-on-year increase in revenue from operations, amounting to Rs 2,264 crore, signaling a strong recovery despite earlier challenges.

Furthermore, Paytm’s EBITDA turned positive at Rs 132 crore, an improvement from a loss of Rs 88 crore a year ago, although it fell short of the Rs 156 crore reported in the December quarter. The EBITDA margin improved to 6% from a negative 5% the previous year, reflecting the company’s enhanced operational efficiency. Excluding UPI and PIDF incentives, the comparable EBITDA showed a notable year-on-year improvement of Rs 330 crore, indicating stronger underlying profitability trends as Paytm continues to refine its operational strategy.

In light of these developments, analysts remain optimistic about Paytm’s future performance. Jefferies has reaffirmed a Buy rating with a target price of Rs 1,350, suggesting a potential upside of 22% from current levels, crediting revenue momentum as a mitigating factor for missing UPI incentives. Bernstein also maintains an “Outperform” rating, projecting a target price of Rs 1,500, anticipating robust earnings growth driven by disciplined cost management and revenue growth exceeding 20% through FY26-30. Both brokerages emphasize that while risks related to UPI incentives persist, strong revenue momentum could continue to underpin future earnings growth.

Source: The Economic Times

(Expert Note: This report was prepared by the Wealthova team.)