Bernstein Names Paytm 'Top Pick' for Merchant Lending Growth

Bernstein designates Paytm as its 'Top pick' due to growth in merchant lending and operating leverage, predicting significant earnings expansion. The report maintains an 'Outperform' status with a target price of ₹2,200, indicating a 26% upside. The anticipated CAGR of revenue is 24% from FY26 to FY30.

Global brokerage Bernstein has recognized Paytm as its 'Top pick', highlighting the burgeoning sector of merchant lending and operating leverage as pivotal factors in driving the fintech giant's earnings trajectory forward. The firm continues to uphold its Outperform rating on One97 Communications, setting a target price of ₹2,200, which marks a 26% increase from the current closing value assessed in their report.

Anticipating robust growth, Bernstein projects that Paytm's revenue will expand at a compound annual growth rate (CAGR) of 24% from fiscal year 2026 to 2030. This prediction is fueled by broader advancements within the company's payments and financial services sectors. Moreover, EBITDA is expected to rise significantly from ₹5 billion to roughly ₹70 billion, enhanced by increased operating leverage.

The report underscores the strong product market fit in merchant loans, with repeat borrowers constituting approximately 55% of total disbursements. Thanks to inherent risk management advantages and early borrower stress detection, Paytm's capability to manage repayments with minimal operational expenditure provides a notable edge over traditional financial institutions.