Paytm is seeing a major shift in brokerage sentiment after strong Q1 FY27 results. Discover why analysts are raising target prices, citing stronger payments growth, profitability and financial-services momentum.
For most of the past decade, the conversation around Paytm circled the same question. Nobody doubted the reach. The company had built India’s largest merchant networks, and its brand had become so fused with mobile payments that “Paytm Karo” turned into everyday shorthand for paying by phone. What analysts kept asking was when all that reach would turn into steady profit. After Paytm’s Q1 FY27 results, that question has been settled, and the answer has moved the Street from doubt to conviction.
Every major brokerage tracking One 97 Communications, the parent of Paytm, raised its price target after the results, and the debate shifted from whether the company can make money to how quickly the profit can grow. The June quarter delivered on every line. Operating revenue rose 28% year on year to ₹2,448 crore, EBITDA came in at a record ₹203 crore, up 182%, and profit after tax reached ₹220 crore, up 79%. On a comparable basis, excluding a Payments Infrastructure Development Fund (PIDF) incentive that ran off at the end of December 2025, EBITDA was up almost tenfold and profit after tax more than tripled. According to the company, revenue is now growing significantly faster than indirect expenses, and that gap is what powers the margin expansion.
Then came a second trigger. In early August, Parliament passed an amendment to the Payment and Settlement Systems Act that opens the door for a merchant discount rate, or MDR, to eventually apply on larger UPI merchant payments. The details of rate and eligibility are still to be settled by the NPCI-led steering committee, and small merchants and consumers are expected to stay free.
The brokerage notes captured how sharply sentiment has turned. Bernstein, arguing the market was now pricing in MDR, raised its target to ₹2,200, the highest on the Street, and kept its Outperform rating, having earlier called the company’s financial services business the star performer. JM Financial, in a note titled UPI monetisation in sight, lifted its target to ₹1,950, saying MDR converts a structurally zero revenue pool into monetisable volume at near full flow through. BofA, calling the shift a paradigm shift and a path to UPI monetisation, moved to ₹1,775 and named Paytm the key beneficiary in its coverage.
Earlier, Investec, describing the quarter as delivering strongly on non linear EBITDA expansion, had set a target of ₹1,720, while Emkay and YES Securities each moved to ₹1,700, the latter arguing the company’s structural EBITDA margin sits well above the 15 to 20% band management has guided to. Jefferies lifted its target to ₹1,600, called the quarter one of strong growth momentum and named Paytm among its preferred fintechs. Goldman Sachs and Citi both moved their targets higher.
The confidence rests on how broad the growth has become. Merchant GMV rose 31% to ₹7.1 lakh crore, faster than the two quarters before it. Distribution of financial services revenue grew 45% to ₹814 crore. And on the consumer side, Paytm’s UPI payment value grew 45%, roughly 2.2 times the pace of the wider market, meaning the company is taking share rather than simply riding the industry.
Behind those numbers is founder and chief executive Vijay Shekhar Sharma, the pioneer of the mobile payments, QR and Soundbox revolution in India. On the earnings call, he described the quarter as the point where a long build finally paid off. The company now has, he said, cash in hand and the aggression in mind and body to press its advantage. He pointed to two areas he is personally focused on. Wealth, spanning equity brokerage and mutual fund distribution is a very bright spot and, in his words, the next driver of consumer monetisation. The second is the consumer app. Asked what is fuelling the consumer surge, he credited the product rather than any single financial service. “New customers in terms of Gen-Z are coming and we sort of have the fancy of Gen-Z customers as a customer base now,” he said.
The layer Sharma returned to most often was artificial intelligence, which he framed as the next chapter after payments. Paytm has built its own India focused language model, optimising a large model down for Indian languages and running it on its own machines, cutting the cost of the call centre and outside vendors. This, he told analysts, is magic, and having built it for itself, the company intends to sell it to outside businesses too.
So the U-turn is complete. Paytm is now profitable, gaining market share and earning more from the network it built first. With every major brokerage raising its target, the question is no longer whether Paytm can make money. It is how much, and how much more AI can add on top.