At the end of the September quarter, Motilal Oswal MF, Nippon India MF, Mirae Asset MF and Bandhan MF were the prominent funds that had a stake in Paytm. In the December share count, while the first three names have all reduced their stakes, Bandhan MF’s name does not figure in the list. This either means that the fund’s holdings have fallen below 1% or that it has exited the stock.On the other hand, retail shareholders continued to sell the shares as their shareholdings fell for the seventh quarter in a row. For retail shareholders, or those who have an authorized share capital of up to Rs 2 lakh, their shareholding in Paytm has fallen to the lowest level since September 2023.
With both mutual funds and retail investors reducing their holdings, the key question now is: what’s in store for Paytm shareholders?
Last month, Goldman Sachs upgraded the stock from Neutral to Buy, signaling a renewed positive stance on the fintech giant. The brokerage sharply raised its price target to Rs 1,570 – more than double the earlier projection of Rs 705 – indicating a potential upside of 20% from current levels.
The brokerage said regulations, which had weighed on the stock in the past, are gradually improving and are already reflected in early gains in Paytm’s payments market share, clearer visibility into earnings and the phased return of key offerings. Together, these factors are expected to support sales growth of over 20% in the medium term. Jefferies said Paytm is the preferred choice in the fintech sector due to the rising value of options in the wealth, credit and international segments. The global brokerage recently raised the target price to Rs 1,600, an increase of 22% from current levels, as it sees the digital payments company at an inflection point to scale new segments that will leverage its distribution and customer base. “Stronger earnings momentum will support premium valuations and upside.”
YES Securities has an add rating on the stock with a price target of around Rs 1,400. Emkay too believes the risk-reward ratio is attractive for a price target of Rs 1,600.
Ventura said the company has significantly improved its business position and achieved profitability and strong revenue growth through operational and strategic shifts. The broker expects Paytm’s subscription-paying device MTUs and merchants could increase from 74 million and 13 million in Q1FY26 to 95 million and 22 million in FY28E, respectively, while payments GMV could improve from Rs 18.7 lakh crore in FY25 to Rs 33.9 lakh crore in FY28E.
After the second quarter, Axis Capital increased its FY27-28 EBITDA estimates by 33-46%, citing improved payment margins, financial services scale and lower operating costs. The company has upgraded the stock to buy option with a price target of Rs 1,500, valuing it at around 41 times FY28 estimated EV/EBITDA. However, the brokerage warned that any deterioration in credit asset quality remains a key risk.
The brokerage believes that Paytm’s omnichannel presence in merchant payments and improving profitability metrics are the key reasons for mutual fund bullishness. According to Axis Capital, Paytm operates one of the largest offline merchant networks in India, with around 13 million devices – including loudspeakers and EDC (Electronic Data Capture) machines – across small and large enterprises. It is also among the top four online payment aggregators by gross merchandise value (GMV).
As the company’s trading relationships mature, analysts see great potential for revenue generation through cross-selling of loan products or price increases on devices and services. Axis Capital noted that Paytm’s pilot project to increase soundbox subscription charges from Rs 100 to Rs 129 has shown encouraging results.
(Disclaimer: The recommendations, suggestions, views and opinions expressed by the experts are their own. These do not represent the views of The Economic Times.)
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