Paytm set to ride credit boom, Axis Capital upgrades to buy call – News Air Insight

Axis Capital upgraded One 97 Communications, the parent company of Paytm, to a ‘buy’ rating, citing accelerating profitability driven by stabilising merchant payments, rising credit-linked payment products, and tight cost control. The brokerage raised its FY27–28 EBITDA estimates by 33–46% and set a price target of Rs 1,500, implying a 20% upside despite asset quality risks.

“Large merchant payment players are entering a strong earnings expansion phase led by a healthy pricing environment across online and offline merchants, improving margins as the UPI mix in GMV is stabilising, and rising share of credit-linked products,” Axis Capital analysts said, adding that clear regulatory frameworks, such as Payment Aggregator rules and Digital Lending Guidelines, accelerate ecosystem participation.

Paytm’s unique positioning

Paytm’s omnichannel presence across 13 million offline devices and strong long-term merchant relationships give it a competitive edge. Paytm is well-positioned with its omnichannel presence across online, enterprise, and small merchants, coupled with strong long-term merchant relationships, the brokerage said. Management is shifting focus “from stabilisation to growth” with new product launches and frontline staff expansion.

Axis Capital said that the rising importance of Paytm’s financial services, especially Credit Line on UPI launched in partnership with Suryoday Small Finance Bank. The brokerage said that EMI financing disbursements “are showing early signs of recovery, led by a pick-up in consumer durables sales.” It expects financial services revenues to grow at a 29% CAGR despite some compression in take rates.

Tight cost control remains a key driver for margin expansion. “Employee costs excluding ESOPs, indirect expenses, and total operating expenses have declined steadily over the past six quarters,” Axis said. Recurring device subscription income and scalable financial services add to potential profits.

Stock setup

Following the upgrade, Paytm shares rose as much as 3.2% intraday on the BSE on Wednesday to Rs 1,283.60. The stock has gained 29% in 2025 so far and 74% over the past 12 months, underscoring growing investor confidence.

Technically, Paytm shares are trading above all eight key simple moving averages. The Relative Strength Index stands at 59.7, while the Moving Average Convergence Divergence remains positive at 14.1, reinforcing bullish momentum.

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Axis Capital tempered its optimistic stance with a caution: “Worsening asset quality in lending is a key risk.” Nevertheless, the upgrade to Buy with a Rs 1,500 price target and a valuation of 41x FY28 EV/EBITDA reflects confidence in Paytm’s path toward sustained earnings growth and margin expansion.