Paytm share price: 3 reasons Goldman Sachs raised target by 39%, maintained Buy

Goldman Sachs has raised its 12-month target price on One 97 Communications Ltd, which operates Paytm, by 39 per cent to Rs 2,070 from Rs 1,500, while maintaining its Buy recommendation on the stock. In a fresh note, the global investment bank said its revised target reflects stronger earnings expectations after factoring in the recently announced UPI MDR, along with what it described as continued strength in Paytm’s market share, revenue growth and margin momentum.

The brokerage said it likes Paytm for three key reasons. First, it said the company’s underlying market share, revenue growth and margin momentum remain strong and are expected to continue. Second, it estimated that the recently announced UPI MDR could lead to Ebitda upgrades of up to 40 per cent for Paytm, and said this is not fully reflected in the current share price. Third, it sees optionalities for Paytm’s earnings and valuation multiples from the scale-up of postpaid, a potential relaunch of the wallet business, and the next deadline for implementation of a UPI market share cap in December 2026, which it said could be a material event for the company.

Goldman Sachs said that after incorporating UPI MDR into its estimates, it has raised its EPS estimates for Paytm by up to 39 per cent. It added that even without UPI MDR, its Ebitda estimate for Paytm was already set to more than double in FY27 over FY26, and then double again in FY28. According to the brokerage, this was driven by steady market share gains in both consumer payments through UPI and merchant payments after the resumption of online merchant onboarding.

It said this trend has also been supported by a shift towards higher-margin products within payments, a ramp-up in postpaid and continued strong cost control. After factoring in MDR on UPI, Goldman Sachs now expects Paytm’s FY28 EBITDA to be five to six times that of FY26, followed by around 30 per cent CAGR until FY30. The brokerage said it sees a positively skewed risk-reward profile for the stock and, in a bull-case scenario, sees around 50 per cent upside, with significantly higher upside in a blue-sky scenario.

On valuation, Goldman Sachs said Paytm trades at 43 times FY28 estimated price-to-earnings, which it described as the mid-point of its India internet coverage. It said multiples could re-rate if Paytm is able to sustain around 25 per cent revenue growth with expanding margins, along with any favourable regulatory events. On its two-year forward EV/Ebitda basis, the brokerage said Paytm trades at a discount to Nykaa and Eternal (Zomato), despite having a similar or stronger Ebitda growth profile.