Paytm shares rise after Q2 results, MSCI return; Jefferies sees stock at ₹1,600

Shares of One97 Communications, the parent company of payments aggregator Paytm, are trading with gains of 4% on Thursday, November 6, reacting to its second-quarter results reported after market hours on Tuesday.The company reported a good set of numbers, scaling up with operational efficiencies, and said AI could emerge as a new revenue driver going forward.

Revenue increased sequentially across segments, though marketing services revenue declined due to the sale of its ticketing business in Q2FY25.

The contribution margin remained largely stable at 59% as against 60% in the previous quarter, while the EBITDA margin improved to 7% from 4%, supported by lower indirect expenses.

Management said efficiencies driven by AI will help keep overall indirect expenses range-bound over the next few quarters and that, in the long term, it expects significant operating leverage and margin expansion.

Profit after tax, excluding one-offs, rose 71% sequentially, though the company took a one-time charge of ₹190 crore for the full impairment of a loan to its joint venture, First Games Technology.

PAT	123	211	71.5%
One off	0	-190
PAT (ex. One offs)	123	21	-82.9%

What brokerages say

Brokerage firm Citi has a ‘Buy’ rating on Paytm, with a price target of ₹1,500.

It said that strong growth and market share momentum in credit on UPI (RuPay and Postpaid) continue to act as a tailwind, likely aiding net payment margins (ex-devices), which stood at over 4 basis points (bps) in Q2 versus Citi’s estimate of 3.6 bps.

The brokerage has raised its margin estimates to 4.2 bps (from 3.6 bps earlier) for FY26-28.

The brokerage added that device costs, across new device capex and refurbishment, have meaningfully declined, improving overall device economics. The outlook on both growth and EBIT margins remains robust, it said.

Meanwhile, CLSA has an ‘Underperform’ rating on Paytm, with a price target of ₹1,000.

The brokerage said that since the company has discontinued disclosing ESOP expenses, an apples-to-apples comparison isn’t possible, but it believes it’s safe to say the quarter was a beat.

Jefferies, too, remains positive on the stock, raising its price target to ₹1,600 with a ‘Buy’ rating. The brokerage said growth in the core business and a ramp-up in new areas could drive a 24% CAGR in revenues and expansion in EBITDA margins over FY25-28.

Besides, index services provider MSCI has announced changes to its India Standard and Smallcap indices today. Four stocks have been included to the MSCI India Standard Index, and One97 Communications or Paytm is one of them.