Bernstein’s Bullish Outlook Sends Paytm To Fresh 52-Week High

Shares of fintech major Paytm rallied as much as 10.67% during intraday trade on BSE today to hit a fresh 52-week high of ₹1,594.80. 

The stock eased slightly from the intraday high to trade 10.23% higher at ₹1,588.40 as of 15:16 IST. Its market capitalisation stood at ₹1.02 Lakh Cr ($10.6 Bn) at the time.

Today’s rally comes after brokerage firm Bernstein upgraded the stock to ‘Outperform’ and raised its price target to ₹2,200 from erstwhile ₹1,500. With the new price target, the brokerage foresees a 53% upside to the stock’s last closing price of ₹1,441. 

The brokerage factored potential UPI MDR monetisation into its base-case estimates from FY28. 

Bernstein expects the introduction of UPI Merchant Discount Rate (MDR) to improve Paytm’s net payment margins by 3-4 basis points. This could boost the company’s FY30 estimated earnings per share (EPS) by 30% compared with its earlier estimates.

“We think MDR could lift net payments margins by 3-4bps, driving a 30% increase in FY30E EPS vs. our previous forecasts,” Bernstein said in its note.

The brokerage said recent comments from the ministry of finance and changes to the law suggest the focus has shifted from whether UPI MDR will return to when and how it will be introduced. Bernstein has therefore included UPI monetisation in its base-case estimates, with benefits expected from FY28.

The estimation follows Lok Sabha’s passage of amendments to the Payment and Settlement Systems Act, 2007, which create an enabling framework for the government to introduce MDR on specified UPI transactions.

Addressing the confusion, the finance ministry, on Saturday (August 8), clarified that consumers will not be charged for making UPI payments and that P2P transactions will continue to remain free. It said any MDR, if introduced, would apply only to a limited set of merchant transactions above a specified threshold and at a nominal rate.

The ministry said the amendment is an “enabling provision” and does not automatically introduce MDR. It is aimed at supporting the long-term sustainability and growth of India’s digital payments ecosystem.

As per the central government, the move will help ensure that UPI remains affordable, inclusive and sustainable while expanding its reach across rural and semi-urban areas.

Meanwhile, Bernstein estimates MDR could apply to around 50% of UPI transaction value. It expects Paytm to gain 3-4 basis points in net payment margin, which could add around ₹2,200 Cr to its EBITDA by FY30.

However, the brokerage said competition among payment platforms could limit the MDR that Paytm is able to retain.

Paytm’s Q1 FY27 Performance

On the financial front, the fintech major has been able to double down on profitability and improve its margins since last year. In Q1 FY27, Paytm reported a 79% YoY jump in consolidated net profit to ₹220 Cr in Q1 FY27, compared with ₹123 Cr in the year-ago quarter. Sequentially, profit rose 20% from ₹183 Cr in Q4 FY26.

Operating revenue grew 28% YoY to ₹2,448 Cr, while revenue excluding UPI and PIDF incentives rose 31% YoY. The company reported a record EBITDA of ₹203 Cr, up 182% YoY, with EBITDA margin improving to 8% from 4% a year ago.

The stock has been on a bull run since the financial disclosure, with the share price gaining about ₹100 in value since the disclosure on July 20. The stock has rallied about 23% on a year-to-date basis.

Amid this bull run, early backer Elevation Capital offloaded Paytm shares worth ₹2,038 Cr through bulk and block deals, selling shares at an average price of ₹1,367.8.

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