Paytm shares rally 50% in 6 months, but Nomura sees 33% more upside, initiates with 'buy'; check target price, rationale
Paytm share price target: Paytm's growth prospects have come into focus after global brokerage Nomura initiated coverage on the digital payments company with a Buy recommendation and a target price of ₹2,250. The target implies a potential upside of 33% from the last closing price, even after the stock's nearly 50% rally over the past six months.
Nomura's bullish outlook rests on several factors, including growth in digital payments, deeper penetration of merchant lending, an improving cost structure and potential revenue from UPI merchant discount rates (MDR). The brokerage also sees opportunities in international expansion and enterprise artificial intelligence (AI), which could add to Paytm's longer-term growth prospects.
Nomura expects Paytm's earnings before interest, taxes, depreciation and amortisation (EBITDA) to grow at a compound annual growth rate (CAGR) of 96% between FY26 and FY29. At current levels, the stock trades at around 26 times its estimated FY29 enterprise value to EBITDA (EV/EBITDA).
However, the investment case is not without risks. A deterioration in asset quality in the lending business and intensifying competition remain key concerns for the brokerage.
Paytm shares have delivered mixed returns over shorter periods despite their strong medium-term performance. The stock has gained 3.5% in one week but declined 5.4% over one month. Over three months, it has advanced 24%, while its six-month gain stands at nearly 50%. On a one-year basis, the stock has risen 33%.
Paytm touched a 52-week high of ₹1,856.50 on September 16, 2026, after hitting a 52-week low of ₹947.10 in March 2026.
The recent rally has not deterred Nomura from seeing further upside, with the brokerage pointing to the potential for stronger payments revenue, improved operating leverage and new business opportunities to support earnings growth.
Paytm's growth prospects are in focus after Nomura initiated coverage on the stock with a Buy rating and a target price of ₹2,250, implying 33% upside. The brokerage expects EBITDA to grow at a compound annual growth rate (CAGR) of 96% over FY26-29F. The stock trades at around 26 times its estimated FY29F EV/EBITDA, although competition and lending asset quality remain key risks.
Payments and merchant lending: Nomura expects Paytm's gross merchandise value (GMV) to grow at a CAGR of 25% between FY25 and FY29. Greater use of credit cards, RuPay credit cards on UPI and credit lines on UPI could lift net payment margins, excluding MDR, from 4.03 basis points in FY26 to 5.26 basis points by FY29. Payment processing revenue is projected to grow at a 25% CAGR over FY26-29. Merchant lending penetration could rise from 8% of its 15.7 million subscription merchant base to 11% by FY29.
Cost optimisation: Total indirect costs are projected to fall from around 50% of revenue in FY26 to 34.1% by FY29. Employee costs could decline from 30.7% to 19.8% of revenue, supported by AI-led efficiencies, while technology costs may fall from 7.6% to 5.9%. Marketing costs are expected to remain around 3% of revenue through FY29.
MDR, international expansion and AI: Potential UPI merchant discount rate (MDR) revenue could generate ₹5 billion in FY28 and ₹6.2 billion in FY29. Around 20% of Paytm's GMV could qualify for MDR at approximately 8 basis points. International expansion through licensing partnerships and select directly operated ventures is expected to contribute meaningfully to earnings only from FY30. Paytm has also launched Pi, its proprietary enterprise AI product for banks and insurers.
India's digital payments opportunity: India's fintech market, valued at $51 billion, is projected to reach $109 billion by 2031E, implying a CAGR of 16%. Digital payments could nearly triple to $10.2 trillion by FY30E, according to the Indian Payments Handbook 2025-2030, with UPI accounting for close to 90% of transaction volumes.
Paytm's growth outlook is supported by expanding digital payments, merchant lending and AI-led cost efficiencies. However, investors should watch for intensifying competition and potential deterioration in lending asset quality as the company works towards delivering the earnings growth projected by Nomura.
Pranati Deva is a seasoned financial journalist with over a decade of experience in high-pressure newsroom environments, currently working as a Senior Sub Editor at LiveMint. Over the years, she has developed a reputation for sharp editorial judgement, a strong grasp of market dynamics, and the ability to translate complex financial developments into clear, engaging stories for a wide audience. <br><br> Her core areas of coverage include stock markets, leading listed companies, currencies, and commodities, with a particular strength in fast-paced, real-time market reporting. She is known for handling breaking market news, earnings-driven stock movements, and macroeconomic developments with speed, accuracy, and context—qualities that are essential in financial journalism. <br><br> Pranati has built a diverse and credible professional track record across some of India’s most respected news organisations, including MintGenie, CNBC-TV18, Business Standard and EconomicTimes.com. During her stints at these platforms, she produced data-driven market stories, curated and steered live blogs during volatile trading sessions, and conducted interviews with market veterans, fund managers, economists, and industry experts. Her work often combines on-ground reporting with analytical depth, helping readers make sense of daily market fluctuations and longer-term trends. An alumnus of the Symbiosis Institute of Media and Communications and Hansraj College, University of Delhi, Pranati brings a strong academic foundation to her journalism. She specialises in real-time financial reporting, with a keen focus on precision, balance, and insight, aiming to decode market movements in a way that is both informative and accessible to readers across experience levels.
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