Why Paytm Stock Could Be Ready for a Valuation Re-rating
One 97 Communications Ltd., the parent company of Paytm, may be heading for a positive “re-rating.” This shift is driven by several factors: the potential to close the valuation gap with its rival PhonePe, hopes for RBI approval to restart its wallet business, strong stock market support, and impressive third-quarter results.
Strategic Goals and the Return of Paytm Wallet
Founder and CEO Vijay Shekhar Sharma has shared a clear vision for the company’s future. His plan focuses on boosting revenue and profit, managing the impact of the PIDF scheme, and renewing focus on the core business. He also sees massive growth potential in the merchant services segment.
A major highlight for users and investors is the possible return of the Paytm Wallet, which stopped working in early 2024. During a recent call with analysts, Sharma stated, “I would rather say, as a promise, we will bring the Wallet back home.” While he did not give a specific date, the intent to relaunch is a key priority for the company.
Managing the PIDF Impact
The Reserve Bank of India’s (RBI) Payment Infrastructure Development Fund (PIDF) was created to improve digital payments in smaller towns and underserved areas. This scheme ended on December 31, 2025.
Paytm earned Rs 128 crore from these incentives in the first half of the 2025 fiscal year. Management is now working to offset the end of this income by focusing on more sustainable growth areas.
Strong Financial Performance in Q3
Paytm’s recent financial results show significant progress:
- Revenue: Rose 6.5% year-on-year to Rs 2,194 crore.
- Operating Profit (EBITDA): Grew 11% to Rs 156 crore.
- Net Profit: Jumped sharply to Rs 225 crore, compared to just Rs 21 crore in the same period last year.
This growth was fueled by high demand for financial services and lower internal costs. Analysts at Morgan Stanley noted that profitability remains strong, even when accounting for the end of government incentives.
Future Outlook and Market Sentiment
The company’s management remains confident about maintaining high growth and healthy profit margins. Their strategy relies on subscription revenues, cross-selling products to existing customers, and expanding the merchant business.
Investors have noticed these improvements. While the stock has faced some pressure recently, it has risen 56% over the last 12 months. According to Bloomberg data:
- 14 analysts recommend a “Buy.”
- 6 analysts suggest a “Hold.”
- 1 analyst suggests a “Sell.”
The average target price from these experts is Rs 1,380, suggesting a potential 19% increase from current levels.
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