Jefferies: Paytm's Platform to Become India's Largest

Paytm Retained as Buy: Jefferies Projects Strong Revenue Growth, EBITDA Margin Expansion​

New Delhi – Paytm, operated by One 97 Communications, is expected to maintain its dominant position in the merchant payments platform, driving growth over the next two years, according to a Monday report from brokerage Jefferies. The brokerage retained its ‘Buy’ rating on the stock with a target price of Rs 1,350, projecting a 22 per cent compound annual growth rate (CAGR) in revenue between FY26 and FY28, alongside expansion in adjusted EBITDA margins.

Jefferies highlighted Paytm’s merchant platform as rapidly emerging as the largest in India across both online and offline channels. The platform, currently supporting 45 million merchants, is anticipated to benefit from rising subscription device penetration and operating leverage. Gross merchandise value (GMV) for payments is forecast to grow at 23 per cent CAGR over FY26 to FY28, reaching Rs 35 lakh crore by FY28 from an estimated Rs 24 lakh crore for FY26, underpinned by a growing base of 13 million installed Soundbox devices.

The company has piloted an artificial intelligence-powered conversational Soundbox across 10,000 outlets and is expected to maintain pricing to strengthen market share. Jefferies noted that Paytm’s merchant lending business is outpacing retail lending, offering better take rates. The brokerage sees a significant longer-term opportunity in credit on UPI, potentially driving higher volumes once non-banking financial companies (NBFCs) are permitted to lend through the platform.

Financial services revenue is projected to grow at a 28 per cent CAGR over FY26-FY28, increasing its share in overall revenue. Total revenue is expected to reach about Rs 12,500 crore by FY28. Jefferies anticipates Paytm to post a profit after tax of Rs 1,700 crore in FY28, compared to a loss of Rs 1,417 crore in FY24. A profit of Rs 574 crore is estimated for FY26. Contribution margins are projected to remain stable at 55-56 per cent, while indirect expenses are expected to decline as a share of revenue, reflecting operating leverage.

The company is also expanding into wealth management and travel, with meaningful contributions anticipated from FY28 onwards. Restrictions on real-money gaming and certain credit card-linked payments are expected to have a limited impact. Paytm’s merchant platform, with its 45 million active merchants and projected subscription device penetration of 36 per cent by FY28, is expected to generate increasing operating leverage, pushing adjusted EBITDA margins from 8.5 per cent to 16 per cent between FY26 and FY28.