Paytm Share: Motilal Oswal Financial Services has increased Paytm's target price. According to the brokerage, the company's contribution margin is continuously improving, which is why its rating has been upgraded to 'Neutral'.
Motilal Oswal Financial Services (MOSL) has released a fresh update on Paytm's parent company, One97 Communications. The brokerage house has given the company a 'Neutral' rating and increased its target price from ₹870 to ₹1000. This is attributed to the stability seen in the company's financial performance and its future growth outlook. According to the report, there are indications of improvement and margin growth in several areas of the company.
Strength Seen in Margin
According to the MOSL report, Paytm's contribution margin could reach 58% by fiscal year 2028. The company's payments business is now moving towards stability, and associated revenue is also gradually increasing. Additionally, the company's revenue may see an annual growth of 22% between FY25 and FY28.
Good Growth Expected in GMV
Paytm's ecosystem is steadily strengthening. The brokerage says the company's hold in the merchant market is increasing, which will directly affect the GMV, i.e., Gross Merchandise Value. An annual increase of 23% is estimated in GMV between FY25 and FY28. GMV indicates the value of goods bought and sold through Paytm's platform.
Role of FLDG Model in Loan Distribution
MOSL has also shown a positive outlook on Paytm's loan distribution model. The company's FLDG (First Loss Default Guarantee) model will boost loan distribution. In this model, if a loan is not repaid, Paytm itself covers the loss. This increases the confidence of lending partners and accelerates loan distribution. A significant increase in personal loan distribution is expected in the second half of FY26.
Improvement in Revenue from Core Business
Paytm has taken several steps to strengthen its core business model. The company is adapting itself to new changes in areas like digital payments and financial services. The brokerage expects this to lead to a sustained improvement in the company's revenue and an increase in profitability.
A Look at the March Quarter Results
The company recorded a loss of ₹540 crore in the fourth quarter of fiscal year 2025, which was ₹550 crore in the same period last year. This means that the loss has decreased to some extent.
Paytm's operating revenue in this quarter was ₹1,912 crore, which was ₹2,267 crore in the same quarter last year, representing a decrease of approximately 16%. However, on a quarterly basis, revenue increased by approximately 5% compared to the previous quarter. The company's revenue in Q3FY25 was ₹1,828 crore.
Paytm's Performance in the Stock Market
On Tuesday, Paytm shares on the BSE reached ₹933.9, up 1%, although they closed at ₹929, a gain of 0.44%. Paytm's shares have risen 16% in the last three months, while they have seen a jump of 125% in the last year. However, there has also been a 6% decline year-on-year.
Brokerage Confidence and Market Movement
After the MOSL report and target upgrade, it is clear that brokerage houses are now seeing stability and potential in Paytm. Although the company still faces the challenge of completely overcoming losses, the strengthening of its core business model has increased confidence in the stock market.
