Paytm's continued expansion in merchant payments is easing concerns over rising competition in India's digital payments market, according to global brokerage Bernstein, which has maintained its 'Outperform' rating on the fintech company with a target price of INR 2,200
NEW DELHI — Paytm's continued expansion in merchant payments is easing concerns over rising competition in India's digital payments market, according to global brokerage Bernstein, which has maintained its 'Outperform' rating on the fintech company with a target price of INR 2,200.
In its latest report on Paytm's Q2 FY27 results, Bernstein highlighted the addition of approximately 7 lakh merchant devices during the September quarter, consistent with the company's recent quarterly run rate. The brokerage noted that sustained device additions were alleviating concerns around rising competitive intensity.
Paytm's merchant device network expanded to 1.64 crore, reflecting its growing reach among businesses. The company also reported improving consumer engagement, with monthly transacting users increasing by 50 lakh sequentially and 1 crore year-on-year to reach 8.5 crore.
Bernstein highlighted the sharp increase in consumer activity as another positive development, suggesting that Paytm continues to strengthen engagement across its payments ecosystem.
While the brokerage flagged rising operating expenses, Paytm's financial performance reflected improving operating leverage. Revenue increased 28 per cent year-on-year to Rs 2,648 crore, while EBITDA rose 90 per cent to Rs 270 crore. Indirect expenses, despite increasing in absolute terms, declined as a proportion of revenue to approximately 46 per cent from 52 per cent a year earlier.
Bernstein also noted an improvement in Paytm's payments monetisation, with net payment margins expanding from 8.5 basis points to 9.1 basis points. Net payment revenue increased 7 per cent sequentially despite payment GMV remaining flat quarter-on-quarter, indicating improved monetisation of existing transaction volumes.
Financial services emerged as another growth driver, with revenue rising 49 per cent year-on-year and 12 per cent sequentially. Meanwhile, marketing services revenue grew 26 per cent year-on-year and 20 per cent quarter-on-quarter, marking a recovery after several quarters of stagnation.
With steady merchant expansion, growing consumer engagement and improving payments monetisation, Bernstein's assessment underscores Paytm's resilience in an increasingly competitive fintech landscape. The brokerage's Rs 2,200 price target implies approximately 33 per cent upside from the October 26 closing price.