Haitong International Foresees Bright Future for Paytm's Expansion

Haitong International reports that Paytm is poised for future expansion funded by internal accruals, bolstered by a strong treasury and growing profitability. The report predicts significant revenue and profit growth, appreciating Paytm's strategic navigation of regulatory challenges and its innovative approach to enhancing operating efficiency through AI and partnerships.

Haitong International anticipates that Paytm will fund its upcoming expansion endeavors through internal accruals. This outlook is supported by a robust treasury portfolio, enhanced operating metrics, and growing profitability, potentially diminishing the need for external fundraising efforts.

In its recent analysis of One97 Communications, Haitong acknowledges Paytm's resilience in navigating past regulatory challenges by executing timely corrective measures. Furthermore, the management's strategic approach to addressing these challenges has been highlighted. The brokerage has maintained its 'Outperform' rating on Paytm, with a target price of ₹1,980.

The report indicates that Paytm's strong treasury portfolio of approximately ₹135 billion as of March 2026, coupled with improving EBITDA margins, should adequately fund its future growth. Haitong projects a 30% CAGR in revenue from FY26 to FY28, with EBITDA and profit after tax anticipated to increase fivefold during this period. By FY28, PAT is expected to reach around ₹26.7 billion, compared to ₹5.5 billion in FY26.

The report also anticipates the continued application of artificial intelligence across Paytm's operations will support accelerated revenue growth and enhance operating leverage, leading to expanded EBITDA margins. It's expected that Paytm's core EBITDA margin will reach approximately 19% by FY28.

Haitong notes an improvement in operational efficiency, with employee expenses decreasing by 16% year-on-year to about ₹26 billion in FY26, despite the addition of approximately 9,400 sales personnel over the year.

Looking forward, Haitong expects Paytm to maintain an asset-light and partnership-driven approach in lending distribution, while intensifying its focus on wealth-related businesses such as equity broking, margin trading, and mutual fund distribution. These areas are anticipated to significantly contribute to the company's revenue and profitability over time.