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Investing.com - Jefferies upgraded One 97 Communications (NSE:PAYT) Ltd (PAYTM:IN) from Hold to Buy and raised its price target to INR1,250.00 from INR900.00 following the company’s better-than-expected quarterly results.
The upgrade comes after Paytm reported first-quarter fiscal year 2026 EBITDA of Rs0.7 billion, which exceeded estimates. The strong performance was partially attributed to lower digital lending gateway costs and operational leverage.
Jefferies noted encouraging quarter-over-quarter growth metrics, with monthly transacting users increasing 3% and gross merchandise value rising 6%. The firm expects contribution margins to stabilize at slightly lower levels over the next two to three quarters.
The investment bank highlighted that Paytm currently trades at a discount to PB Fintech (NSE:PBFI) and sees potential for "compounding-led returns" for investors. Revenue growth and operational leverage are expected to drive profitability going forward.
Jefferies also identified several potential positive catalysts for Paytm, including its payment aggregator license, buy-now-pay-later and wallet offerings, and the possibility of merchant discount rates on Unified Payments Interface (NASDAQ:TILE) transactions.
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