Citi has reiterated its buy call on Paytm with a target price of ₹1,215 after the Reserve Bank of India granted “in-principle” authorisation to its subsidiary, Paytm Payment Services, to operate as an online payment aggregator. The approval marks the end of a nearly three-year regulatory restriction that had prevented the company from onboarding new online merchants in its payment gateway business since November 2022. While Paytm had been able to continue servicing its existing clients during this time, the inability to add new merchants had constrained its growth potential in one of its key business verticals.
The brokerage said the licence win is a positive development for investor sentiment and lifts a major overhang on the stock. With the restriction now lifted, Citi expects Paytm to leverage its scale, technology capabilities, and strong product development to re-establish its competitiveness in the merchant payments space. The resumption of onboarding is seen as a key enabler for expanding its merchant base, especially in the fast-growing small and medium enterprise segment where the company already enjoys a strong presence. Citi believes that Paytm’s brand recall and integrated payments ecosystem position it well to capture incremental market share in the coming quarters.
This regulatory clearance comes at a time when Paytm is seeking to strengthen its financial performance and rebuild market confidence after a series of challenges. Citi sees the approval as a structural positive that could support stronger growth in its payments business over the medium term, while also improving its ability to monetise merchant relationships more effectively.
Disclaimer: The views and recommendations made in this article are those of Citi. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
