Investec has initiated coverage on Paytm with a buy rating and a target price of ₹1,550 per share, citing improving earnings quality, strong operating leverage and rising contribution from higher-margin businesses.
The brokerage believes Paytm’s deep technology capabilities and entrenched merchant relationships provide the company with long-term pricing power while creating high switching costs for merchants. According to Investec, this structural advantage supports durable monetisation across Paytm’s payments, commerce and credit-adjacent offerings.
Investec highlighted that Paytm has already completed most of its merchant acquisition phase, which, combined with a digital-first operating model, positions the company to benefit meaningfully from operating leverage as revenues scale. With the core merchant network largely in place, incremental revenue growth is expected to translate into disproportionately higher profitability.
The brokerage forecasts a 23% net revenue CAGR over FY26–28E, driven by scale efficiencies and increasing contribution from higher-margin credit-linked products. Investec expects EBITDA margins (as a percentage of net revenue) to expand sharply to 24% by FY28E, from 8% in 1HFY26, reflecting improved unit economics and a richer business mix.
Overall, Investec sees Paytm transitioning into a phase of sustainable and profitable growth, underpinned by operating leverage, stronger margins and monetisation of its existing ecosystem.
Disclaimer: The views and recommendations above are those of Investec. Business Upturn does not endorse them. Please consult a financial advisor before making investment decisions.
