Goldman Sachs Reaffirms Paytm's Growth Potential Amid Regulatory Changes

Goldman Sachs has reiterated its 'Buy' rating for Paytm (One 97 Communications Ltd.), setting a target price of ₹1,400, which suggests a potential upside of 22% from current prices. This decision reflects Paytm's consistent market share growth in both consumer and merchant areas and minimal repercussions from the banking license cancellation of its related entity. The brokerage anticipates that Paytm will display another strong operational quarter in Q4 FY 2026, with gross merchandise value expecting an annual growth of approximately 26%, rising from 23% in Q3. Despite facing a short-term revenue obstacle due to the loss of PIDF incentives, Goldman Sachs maintains a positive outlook on Paytm's EBITDA performance, predicting margins at 5.8%.

The investment bank also noted an uptick in Paytm's clout across various segments. Leveraging data from the National Payments Corporation of India, it highlighted that Paytm's UPI market share by value climbed to 6.5% in March 2026, growing from 6.2% in December 2025, and 5.4% the previous year, indicating a steady comeback. On the merchant front, data from SensorTower suggested an improvement in the company's merchant app download market share, reaching Q4 FY26 levels akin to 2023, signaling a complete rebound in merchant engagement.

Financial services continue to be a formidable vertical for Paytm, with revenue growth projected at 33% year-on-year for Q4, in line with Q3's 34% YoY pace. Notably, Paytm's Default Loss Guarantee (DLG) reports showed a significant acceleration in the outstanding loan book with 11% QoQ growth in Q4, compared to just 2% in Q3, indicating a resurgence in lending activity. In terms of profitability, Goldman Sachs expects Paytm to stay EBITDA positive with progressive margin improvements. The report hints at a substantial medium-term growth trajectory, anticipating a significant expansion in EBITDA margins as the business scales.

The brokerage remarked that regulatory actions have limited impact on Paytm, as the company has strategically detached from PPBL over the past two years. Paytm had written off its entire investment in PPBL by early 2024, currently earns no revenue from the bank's operations, and shifted its UPI handles to partner banks after securing a Third Party Application Provider (TPAP) license from NPCI in March 2024. Goldman Sachs emphasized that Paytm and PPBL have maintained separate management and board members for the last two years. The regulatory order corresponds with the Banking Regulation Act, indicating a procedural wrap-up rather than new regulatory challenges. Crucially, the brokerage pointed out that the regulator granted Paytm payment aggregator authorization for both online and offline merchants in late 2025, underscoring sustained regulatory trust in Paytm's core operations.

(With inputs from agencies.)