Geojit Financial Services has upgraded its stance on One 97 Communications to an “Accumulate” rating, citing improving profitability, sustained merchant growth, and accelerating traction in financial services distribution. The brokerage has revised its 12-month target price to Rs. 1,302 from the current market price of Rs. 1,154, implying an upside potential of nearly 13%. The company’s Q4FY26 performance reflected a decisive operational turnaround, with EBITDA margins turning positive and lending momentum recovering. Paytm’s management is now positioning wealth management and AI-driven personalization as key strategic pillars, while operational discipline and payment monetization continue to support long-term margin expansion.

Geojit Turns Constructive on Paytm’s Profitability Journey

Geojit Financial Services has upgraded Paytm to “Accumulate” with a revised target price of Rs. 1,302. The brokerage believes the fintech major is entering a structurally stronger phase after delivering significant operational improvements during FY26. The revised valuation is based on a 6.5x FY28 estimated price-to-sales multiple, reflecting confidence in the company’s ability to sustain growth while steadily improving profitability.

Paytm’s transition from aggressive expansion toward disciplined monetization appears to be gaining traction. The company has started leveraging its large merchant ecosystem more effectively, particularly across lending distribution, subscription-based devices, and financial services cross-selling.

Revenue Momentum Remains Strong Across Core Segments

Revenue from operations rose 18.4% year-on-year to Rs. 2,264 crore in Q4FY26. Growth was primarily fueled by merchant payment services and financial services distribution, areas that continue to demonstrate strong monetization trends.

The payments business remained one of the strongest contributors during the quarter. Revenue from this segment climbed 25% YoY to Rs. 583 crore, supported by:

• 27% growth in merchant GMV
• Improving payment margins
• Continued market share gains
• Expanding merchant subscriptions

Meanwhile, the distribution of financial services business surged 38% YoY to Rs. 750 crore. This performance was driven by rising merchant loan disbursals, stronger postpaid demand, recovery in personal loans, and better monetization in wealth products.

Merchant Ecosystem Continues to Expand Aggressively

Merchant Gross Merchandise Value (GMV) expanded to Rs. 6.5 lakh crore during the quarter. The increase reflected both higher merchant onboarding and stronger transaction activity across the platform.

One of the standout operational metrics came from merchant subscriptions. According to management commentary, merchant subscriptions — including payment devices — reached 1.51 crore by March 2026, with 27 lakh net additions over the last 12 months.

This growing merchant network provides Paytm with a scalable ecosystem for higher-margin financial products such as loans, insurance, and wealth distribution.

AI-Led Consumer Engagement Emerging as Strategic Growth Lever

Paytm is increasingly integrating artificial intelligence into customer engagement and merchant retention strategies.

Monthly transacting users reached 7.7 crore during the March 2026 quarter, reflecting a year-on-year increase of 50 lakh users. Management attributed this improvement to AI-led personalization and deeper customer engagement initiatives.

The company also plans to deploy AI agents to strengthen merchant retention and improve operational efficiencies. Analysts believe this could enhance customer lifetime value while reducing acquisition costs over time.

Geojit noted that AI-enabled personalization, alongside disciplined pricing and recovery in marketing services, could become meaningful earnings catalysts over the medium term.

EBITDA Turns Positive as Cost Discipline Begins Delivering Results

Paytm’s adjusted EBITDA improved sharply to Rs. 132 crore in Q4FY26 from a loss of Rs. 88 crore in the corresponding quarter last year. EBITDA margins improved to 5.8% compared with negative 4.6% in Q4FY25.

The improvement was largely driven by:

• Reduction in employee benefit expenses
• Lower operational costs
• Higher merchant monetization
• Scaling of high-margin financial distribution businesses

Management now expects EBITDA margins to reach 15–20% over the next 2.5 to 3 years through operating leverage and tighter cost controls.

Financial Metrics Reflect a Significant Operational Turnaround

The company’s profitability profile is expected to strengthen materially over the next two financial years, with adjusted profit after tax forecast to nearly triple between FY26 and FY28.

Strong Cash Position Offers Strategic Flexibility

Paytm continues to maintain a strong balance sheet with zero debt and substantial liquidity reserves.

As of March 31, 2026, the company reported a cash balance of Rs. 13,315 crore, compared with Rs. 12,809 crore a year earlier.

The strong liquidity position gives the company flexibility to invest in new growth verticals, technology infrastructure, and overseas expansion initiatives.

In a strategic move, Paytm Cloud Technologies and its subsidiary incorporated PT Paytm Indonesia Teknologi in April 2026, investing nearly Rs. 8 crore into the Indonesian entity.

Valuation Still Demands Execution Precision

Despite improving fundamentals, Paytm continues to trade at elevated valuation multiples.

According to Geojit estimates:

• FY27E P/E stands at 61.6x
• FY28E P/E stands at 35.9x
• FY27E EV/EBITDA is projected at 60.1x

While these valuations remain premium, analysts believe the market is increasingly pricing in Paytm’s transition toward sustainable profitability and scalable fintech monetization.

Investment Outlook: Gradual Re-Rating Possible if Execution Holds

Geojit believes Paytm is entering a more stable and scalable growth phase. The brokerage expects improving lending recovery, wealth management expansion, AI-driven engagement, and operating leverage to gradually strengthen investor confidence.

The brokerage’s “Accumulate” recommendation reflects optimism around Paytm’s ability to evolve beyond payments into a diversified financial ecosystem with stronger margins and improving earnings visibility.

For investors, key levels remain:

• Current Market Price: Rs. 1,154
• Target Price: Rs. 1,302
• Expected Upside: 13%
• Investment Horizon: 12 Months

Disclaimer: Investors should conduct their own due diligence and evaluate risk tolerance before making investment decisions in equity markets. This article is based on brokerage research findings and financial projections.