Paytm Expands Merchant Reach, Bernstein Keeps Outperform Call
New Delhi, October 27
Paytm is continuing to widen its merchant payments business, a move that is helping to allay worries about growing competition in India's digital payments sector, global brokerage Bernstein said. The firm has retained its Outperform rating on the fintech company and set a target price of Rs 2,200.
Bernstein's latest note on Paytm's September quarter results, which form part of fiscal 2026-27's second quarter, noted that the company onboarded about 700,000 merchant devices during the period. That is in line with the recent run-rate, and the brokerage said steady device additions are reducing concerns about competitive pressure.
Paytm now operates 1.64 crore merchant devices, a figure that points to its deepening presence among businesses. User activity also expanded. Monthly transacting users increased by 50 lakh from the previous quarter and by one crore from a year earlier, reaching 8.5 crore.
Bernstein viewed the rise in consumer activity as another encouraging signal, suggesting that Paytm is consistently strengthening user engagement across its payments ecosystem.
While the brokerage flagged rising operating costs, Paytm's financials point to better operating earnings. Revenue went up 28 per cent year-on-year to Rs 2,648 crore, and EBITDA surged 90 per cent to Rs 270 crore. Indirect expenses rose in absolute terms, yet as a percentage of revenue they dropped to about 46 per cent from 52 per cent a year before.
The payments unit also showed improved earning capacity. Net payment margin widened to 9.1 basis points from 8.5 basis points. With GMV flat quarter-on-quarter, net payment revenue still rose 7 per cent, reflecting greater income generated from the same transaction base.
Financial services became an important growth engine, with revenue climbing 49 per cent annually and 12 per cent quarterly. Marketing services revenue increased 26 per cent year-on-year and 20 per cent quarter-on-quarter, pointing to improvement after a prolonged lull.
Bernstein's assessment highlights Paytm's strength in a rapidly competitive fintech landscape, supported by its expanding merchant base, rising user participation and better payment economics. The brokerage's Rs 2,200 target suggests a potential gain of roughly 33 per cent over the October 26 closing price.