Paytm's net profit rose 79% to ₹2.2 billion in Q1 FY27. Brokerages including Morgan Stanley and JPMorgan raised target prices, citing operating leverage and accelerating GMV growth.
Paytm's net profit rose 79% in the June quarter, and brokerages responded by raising target prices on the stock, saying the company is executing well in a large and profitable market.
Revenue hit ₹24.5 billion, up 28% from a year earlier and 8% from the prior quarter. Net profit came in at ₹2.2 billion. EBITDA reached ₹2.0 billion, expanding the margin to 8.3% from 5.8% in the March quarter. Gross merchandise value grew 31% year-on-year to ₹7.1 trillion, accelerating from the 27% and 23% growth rates of the two previous quarters. Financial services revenue jumped 45%.
The common thread across the brokerage notes was operating leverage. Revenue grew far ahead of costs. Indirect expenses rose only about 6% year-on-year.
Investec set the highest target on the Street at ₹1,720, up from ₹1,470, and kept its Buy rating. The brokerage said:
The company has achieved non-linear EBITDA expansion.
Core EBITDA rose to ₹1.92 billion, roughly 10% ahead of its estimate and 57% higher sequentially. Investec raised its FY27 and FY28 EBITDA estimates by 5-6%.
Axis Capital raised its target to ₹1,490 and maintained Buy. Adjusted EBITDA, excluding a payments infrastructure development fund impact, rose about 60% sequentially to ₹2.0 billion, helped by a roughly 300 basis point expansion in core EBITDA margin to 8%. The brokerage said accelerating payments growth, momentum in high-margin financial services, and AI-led operating leverage improved medium-term earnings visibility. It pointed to rising traction in postpaid and personal loans as key growth drivers.
Haitong International kept its Outperform rating with a target of ₹1,460. It said financial services revenue growth surprised positively and that merchant GMV growth of 32% was higher than expected, led by market-share gains. Growth was broad-based across small merchants, large merchants, consumer payments, and financial services, rather than driven by a single segment. More than half of merchant loan disbursements were to repeat borrowers, with collection trends stable.
Morgan Stanley raised its target sharply to ₹1,450 from ₹1,175. Its thesis described Paytm as executing well in a market with a very large profit pool. The brokerage said it is ahead of consensus on payment and financial-services revenue and margins for FY27 to FY29, and expects the EBITDA margin to rise to about 19% by FY29. It sees a 25% revenue growth rate over FY26 to FY29. Morgan Stanley also noted that the stock's recent run had captured much of the strong execution.
JPMorgan lifted its target to ₹1,300, calling the quarter a beat across the board. It said EBITDA margins expanded handsomely, driven by continued indirect cost control, and pointed to accelerating GMV on the back of consistent Soundbox additions and higher merchant retention. It also flagged a recovering consumer payments business, with monthly transacting users rising to 80 million.
Across the notes, brokerages relayed management's confidence in reaching a 15-20% EBITDA margin over the next two to three years, driven by operating leverage and slower growth in indirect expenses. Management said financial services momentum was building across postpaid and personal loans. Devices deployed rose to 15.7 million and the registered merchant base grew to 50 million.
Several brokerages also flagged Paytm's in-house AI stack, tuned for Indian languages and run on its own infrastructure. The company said it was lowering costs and could become a new revenue line for merchants over time.
Paytm's cash balance stood at about ₹135 billion, net of client balances, which brokerages cited as balance-sheet strength.
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