Paytm shares get a 'double upgrade'; Axis Capital sees stock at ₹1,500

Shares of One97 Communications Ltd., parent company of payments aggregator Paytm, gained over 2% on Wednesday, October 15, after it received a double upgrade from brokerage firm Axis Capital.

Axis Capital double-upgraded the stock to "buy" from its earlier rating of "reduce", and raised its price target to ₹1,500 from ₹950 earlier. The revised price target implies a potential upside of 20% from Tuesday's closing levels. This is the joint second-highest price target that Paytm has received from analysts tracking it, following Ventura Securities' ₹2,074.

The brokerage is of the view that large merchant payment players are entering a strong earnings expansion phase, led by healthy pricing environment across online and offline merchants, improving margins, as the mix of UPI in Gross Merchandise Value is stabilizing and the share of credit-linked products is rising, clear regulatory framework, and high vintage merchant relationships.

Paytm's focus has shifted from stabilization to growth with fresh investments being made in new products and frontline staff.

Axis Capital has raised its financial year 2027 and 2028 Earnings Before Interest, Tax, Depreciation and Amortisation (EBITDA) estimates for Paytm by 33% and 46% respectively, aided by better payment margins, financial services scale up and a tight operating expenditure.

The brokerage also expects Paytm's EBITDA margins to expand to 15% by financial year 2028 from 3.7% in the first quarter of the current financial year.

Non-linear optionalities from MDR on UPI, a ramp-up of Buy Now, Pay Later (BNPL) can drive further upgrades, according to the brokerage, who also said that worsening asset quality in the lending business is a key risk to their estimates.

Out of the 19 analysts that have coverage on Paytm, 11 have a "buy" rating on the stock, five say "hold", while three have a "sell" rating.

Shares of Paytm are trading 2.6% higher on Wednesday at ₹1,276.8. The stock is up 4% in the last one month and has gained nearly 30% so far in 2025. From its all-time low of around ₹300 in early-2024, the stock has risen over 4x from those levels.