Paytm seen delivering 4X profit growth, Haitong sets ₹1,410 target
Merchant-led growth, lending expansion drive revenue, margins and profitability outlook
EBITDA margin to rise to 17%, ROE improves to 12% by FY28
Hong Kong-based Haitong Securities has initiated coverage on One 97 Communications, the parent of Paytm, with an 'Outperform' rating and a target price of ₹1,410, implying an upside of 26% from current levels, driven by strong growth prospects in digital payments and merchant lending.
The brokerage's bullish stance comes even as Paytm's stock has corrected around 20% from its 52-week high of ₹1,381 and declined 15% so far this year amid global market volatility linked to the ongoing Iran-Israel-US conflict. However, the stock remains 31% higher on a one-year basis and saw a 16% rebound in April, indicating underlying investor confidence.
1 April 2026
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Haitong expects Paytm's financial performance to improve significantly over the next few years, projecting a nearly fourfold rise in both EBITDA and net profit between FY26 and FY28. Profit after tax is estimated to grow to ₹22 billion by FY28 from ₹5.9 billion in FY26, supported by margin expansion and utilisation of accumulated tax losses.
The brokerage has also projected a steady improvement in return on equity to around 12% by FY28 from approximately 4% in FY26, reflecting better operating efficiency and profitability.
Merchant Ecosystem Drives Growth
Haitong highlighted Paytm's strong positioning in India's retail digital payments ecosystem, particularly its growing focus on merchant-led expansion. The company currently ranks as the third-largest player in UPI value share, with 6.9% of transactions as of February 2026.
The platform's strategic shift from a consumer-centric to a merchant-centric model is reflected in rising monetisation metrics, with revenue per monthly transacting user increasing to ₹1,155 in the December 2025 quarter.
Paytm's merchant base stood at 48 million as of December 2025, with payments contributing around 60% of total revenue. Haitong expects this segment to grow at a compound annual growth rate (CAGR) of 25% between FY26 and FY28, driven by deeper penetration of subscription-based merchants, increased adoption of MDR-linked payment instruments and a potential restart of its wallet business following regulatory approvals.
Margins and Lending Boost Profitability
The brokerage expects Paytm's core EBITDA margin to expand significantly from 6.5% in FY26 to around 17% by FY28, supported by operating leverage and cost efficiencies.
Net payment revenue, including subscription income but excluding incentives, is projected to grow at a 38% CAGR over FY26-28, outpacing gross merchandise value growth of 25%. This is expected to improve net payment margins to approximately 10 basis points by FY28.
Merchant lending has emerged as a key growth driver, now contributing 30% of revenue compared to 9% in FY22. Haitong noted that Paytm's extensive on-ground merchant network provides a strong distribution advantage, attracting lending partners and enabling scale.
The company's broader financial services portfolio, including personal loans, stock broking and insurance distribution, is also expected to support revenue diversification and long-term growth.
Efficiency Gains and Competitive Positioning
Haitong's peer analysis indicates that Paytm has built a relatively efficient operating model compared to competitors such as PB Fintech, PhonePe and Pine Labs.
The company has reduced employee expenses, including ESOP costs, to 33% of revenue from 47% in FY23, while maintaining higher technology investments at 8-9% of revenue. Marketing spends have also moderated to 6-10%, lower than several peers.
The brokerage noted that Paytm has already achieved positive core EBITDA margins of 5.3% in the first half of FY26, in contrast to some peers reporting negative margins due to higher costs.
Risks remain
Despite the positive outlook, Haitong flagged several risks, including potential regulatory actions across Paytm's multiple business segments such as payments, lending, broking and insurance distribution.
It also cautioned that any stress in the credit ecosystem could impact lending growth, while rising competition in the fintech space may affect margins and growth trajectory.
However, the brokerage noted that Paytm has navigated past regulatory challenges effectively through timely corrective actions, strengthening confidence in its long-term business model.
