Bernstein has maintained its outperform rating on Paytm with a target price of ₹1,100 following the Reserve Bank of India’s decision to grant “in-principle” approval to Paytm Payment Services to operate as an online payment aggregator. The brokerage said the move is a significant and positive development for the company, bringing to an end a long-standing regulatory overhang that had restricted merchant acquisition in its payment gateway business since November 2022.
While Paytm continued to serve existing merchants over this period, the inability to onboard new clients limited its addressable market and capped growth in its payments segment. Bernstein said the regulatory clearance will now allow Paytm to target the long tail of smaller merchants, a category that typically yields higher margins than large enterprise customers. Over time, this is expected to contribute positively to overall payment margins, although the immediate impact on key metrics may be limited.
The brokerage emphasised that the removal of the restriction is as much about strategic flexibility as it is about financial performance, as it restores Paytm’s ability to compete fully in the fast-evolving digital payments ecosystem. Bernstein added that the move could help boost confidence among both investors and merchants, supporting Paytm’s broader growth ambitions in the sector.
Disclaimer: The views and recommendations made in this article are those of Bernstein. This article does not constitute investment advice. Investors should consult their financial advisors before making any investment decisions.
