Paytm Shares Surge on Strong Q1 Earnings and Bernstein's Massive Target Hike
Market Reacts Positively to Analyst Upgrade
One97 Communications, the parent company of payments aggregator Paytm, saw a significant rally on Monday after Bernstein raised its target price for the stock. The shares surged 4.5%, reaching a day high of ₹1,506 on the BSE. Bernstein upgraded its rating while setting the target price at ₹2,200, representing a substantial 52% upside from its previous estimate of ₹1,500. This revised target is noted as the highest on the Street and marks the first time Paytm received a valuation above its IPO listing price.Bernstein Factors in UPI Monetisation into Base Case
Bernstein's increased rating incorporates the future introduction of the Merchant Discount Rate (MDR) on UPI transactions starting from FY28E onwards. The brokerage assumes a headline MDR of around 35 basis points, applicable only to a subset of UPI P2M transactions. This transition moves UPI monetisation from optionality assumptions into the base-case forecast.The brokerage estimates that even this limited charging perimeter could cover a meaningful portion of payment value. Paytm is expected to realize around 3-4 basis points of incremental net payments margin through MDR implementation. This specific stream is estimated to translate into approximately ₹22 billion in additional EBITDA by FY30E. Bernstein noted that the government's stance suggests this discussion has shifted from whether MDR will return to when and how it will be implemented.
Q1 Results Highlight Profitability Growth
The fintech company reported robust quarterly earnings for the quarter ended June 2026. Paytm posted a consolidated net profit of ₹220 crore, marking a significant increase of 79% compared to the ₹123 crore recorded in the corresponding period last year. Revenue from operations also saw strong growth, rising 28% year on year to reach ₹2,448 crore from ₹1,918 crore.Total income for the quarter stood at ₹2,630 crore. This figure represents a 22% increase compared to the ₹2,159 crore recorded one year ago, and it is higher than the ₹2,442 crore reported in the preceding quarter. These strong operational results underscore the company's focus on profitability amidst competitive intensity in merchant acquiring.
Board Decisions Focus on Long-Term Growth
In addition to Q1 performance, Paytm’s board made decisions reflecting its commitment to long-term shareholder value creation. The board decided against proceeding with a bonus issue at this time. Instead, management reaffirmed the company's focus on compounding growth and profitability as crucial drivers of shareholder wealth.The company also approved an additional investment of ₹100 crore through subscription to equity shares of Paytm Money, its wholly-owned subsidiary. This strategic move demonstrates continued commitment to scaling infrastructure while maintaining financial discipline.
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