Mumbai, January 23, 2026, 12:36 IST
- Paytm erased early gains and slipped almost 4% by late morning, despite Investec kicking off coverage with a bullish call
- Investec highlighted operating leverage and projected a 23% net revenue CAGR, expecting the EBITDA margin to hit 24% by FY28E
- The move reflects ongoing investor caution over Paytm’s regulatory challenges and execution risks
Paytm shares reversed course on Friday, dropping nearly 4% by 11:50 a.m. after an initial jump of 3.48%, sparked by Investec kicking off coverage with a “Buy” rating and a 1,550 rupee target price. Investec described Paytm as a “payments toll-road operator with strong opex leverage,” projecting a 23% net revenue CAGR from FY26 to FY28E and an EBITDA margin rising to 24% by FY28E, up from 8% in H1FY26. Indian indices were lower too, with the Nifty down 0.33% and the Sensex slipping 0.39% near midday. 1
The stock’s reaction to brokerage calls highlights a larger, unresolved issue: can One 97 Communications, the operator of Paytm, turn its payment volume into consistent profits following regulatory blows to its banking division. India’s central bank has ordered Paytm Payments Bank to halt deposits and key services after Feb. 29, 2024, due to ongoing compliance problems—a move that shook Paytm’s broader business at the time. 2
That’s why Friday’s initiation is key. Investec’s note delivers a clear message investors crave — costs climbing more slowly than revenue, a boost in higher-margin “credit-adjacent” income tied to lending distribution, and margins starting to resemble an actual business, not just a project.
Investec’s Param Subramanian kicked off coverage of One 97 Communications with a “Buy” rating, according to StreetInsider on Thursday. 3
Not all investors are jumping in. Whalesbook noted that domestic mutual funds trimmed their Paytm stakes in the October-December quarter, with retail investors also offloading shares, despite analysts growing more bullish on the stock. 4
Paytm operates in a packed payments space dominated by PhonePe and Google Pay in daily UPI (Unified Payments Interface) transactions, making easy gains scarce. The competition has moved beyond payment processing to monetising merchants via devices, subscriptions, and lending partnerships.
Friday’s reversal underscored that the market’s debate is far from over. Investec’s margin goals hinge on successful execution in lending-related products and a steady regulatory environment. Should credit growth slow or compliance issues resurface, hitting those targets will take longer, keeping the stock volatile.
One 97 Communications, which went public in 2021, has spent the last couple of years regrouping after the payments-bank shakeup, shifting its focus toward merchant payments and financial services distribution. The stock’s next move will depend less on analyst initiation notes and more on whether its reported results begin to reflect the promised operating leverage.
