Analysts are increasing their ratings against the backdrop of strong sales growth and profitability prospects

Paytm, India’s leading mobile payments and financial services company and pioneer in QR and mobile payments, has posted strong results in the second quarter of 2025. The company reported significant revenue growth of 11 percent quarter-on-quarter quarter (QoQ) to Rs 1,660 Cr, driven by the continued expansion of its financial services payments and distribution business.

Paytm’s improvement in profitability and EBITDA pre-ESOP has impressed key brokerage firms, many of which have maintained a positive view on Paytm’s future prospects. Notably, the company also received approval from NPCI to onboard new UPI users.

Several brokerage firms, including Yes Securities, Goldman Sachs, Bernstein, Macquarie, UBS and BofA, have reiterated their positive outlook for Paytm following strong September second quarter (Q2FY25) earnings, citing strong cost controls, regulatory developments and potential for the long term. grow.

This optimism is reflected in the rating upgrades, with analysts expressing confidence in Paytm’s ability to achieve breakeven EBITDA by the end of FY25.

‘Target of EBITDA break-even this year seems realistic’

Yes Securities has significantly upgraded Paytm’s stock to a ‘Buy’ rating, underscoring the company’s progress in achieving profitability. Yes Securities highlights Paytm’s 11 percent QoQ revenue growth to Rs 1,660 Cr and improvement in pre-ESOP EBITDA to Rs (186) Cr, up by Rs 359 Cr QoQ. Yes Securities stated that the target of achieving break-even EBITDA this year appears achievable, driven by effective cost management and other key factors.

Brokerage firm Yes Securities shared a new price target of Rs 800. This is based on valuing the company at 4.8 times expected FY26 revenue.

Goldman Sachs also noted Paytm’s positive trajectory, especially with the recent approval from the National Payments Corporation of India (NPCI) to resume onboarding new users for UPI services. “Paytm announced (on October 22) that it has received NPCI approval for onboarding new UPI users, which we believe should help revive MTU growth and also provide an overhang from the shares away,” the brokerage firm said in a report. Goldman Sachs raised its price target to Rs 480 from Rs 420 while maintaining a ‘neutral’ rating, expecting Paytm to post a net profit gain by FY27.

Bernstein echoed a similar sentiment, calling Paytm’s Q2 25 earnings a solid set of numbers, with a marked improvement over previous quarters. The brokerage awarded an ‘Outperform’ rating with a target price of Rs 600. Bernstein also highlighted the importance of the NPCI approval for onboarding new UPI users and called it a ‘positive regulatory development’ that should bring relief and increase the chances of favorable outcomes. in future regulatory decisions.

Meanwhile, BofA Securities noted that Paytm’s earnings exceeded expectations, with revenue coming in 4 percent higher than expected. The company pointed to strong growth in both the payments and credit segments, coupled with solid cost control, allowing Paytm to report an adjusted EBITDA loss of Rs 1.86 billion – well below BofA’s expected loss of Rs 3 billion .

Macquarie noted that Paytm’s EBITDA loss was smaller than expected, helped by higher distribution revenues and lower employee costs.
NPCI grants Paytm approval to new UPI users

Global investment firm UBS highlighted that the approval of NPCI will enable Paytm to expand its customer base and capture a larger share of the payments GMV, helping to recover from a recent decline in the number of monthly transactions (MTU).

Meanwhile, Bernstein noted that the National Payments Corporation of India (NPCI) has granted Paytm permission to onboard new UPI users through a letter dated October 22. This positive development is expected to not only curb the decline in Paytm’s MTU but also boost investor confidence regarding potential prospects. favorable regulatory outcomes.

These positive analyst reports reflect increasing confidence in Paytm’s ability to achieve sustainable growth and profitability. The upgrades from leading brokerage firms underscore the company’s strong financial performance in the second quarter of 2025 and the potential for long-term value creation.