Jefferies Reaffirms 'Buy' Rating for Paytm Amid Structural Resilience
Jefferies maintains a 'Buy' rating on Paytm, highlighting its intact growth and profitability despite regulatory actions on Paytm Payments Bank Ltd. Structural changes have been implemented, ensuring operational stability. Paytm's revenue CAGR is expected to be 22% from FY26 to FY28, with projected profitability improvements.
Global brokerage firm Jefferies has reaffirmed its 'Buy' rating for Paytm amidst regulatory challenges faced by its associate entity, Paytm Payments Bank Ltd (PPBL). The firm expressed confidence in Paytm's growth engine and profitability despite the ongoing regulatory actions.
In a recent report, Jefferies noted that Paytm had already initiated comprehensive structural adjustments over the last two years in response to regulatory restrictions. These modifications included closing its wallet business connected to the bank, transitioning UPI handles to alternative partner banks, terminating inter-company agreements, and writing off its banking entity investment.
With these changes complete, Jefferies highlighted that the license cancellation has minimal incremental impact on Paytm's operations. The company is expected to achieve a revenue CAGR of 22% from FY26 to FY28, focusing on financial services distribution growth and payments business expansion. The company's profitability trajectory is anticipated to improve, with profit after tax projected to reach Rs 1,700 crore by FY28.
(With inputs from agencies.)
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