Paytm gets target price hikes from BofA, JM Financial as UPI monetisation expected to boost earnings

MUMBAI: Global brokerages Bank of America Securities and JM Financial have raised their price targets on Paytm, saying the potential monetisation of UPI merchant payments through the application of a Merchant Discount Rate (MDR) could boost revenues and open up a new earnings stream for the fintech company, while its underlying business momentum remains strong.

BofA Global Research raised its price objective on Paytm to ₹1,775 from ₹1,560 and reiterated its Buy rating, describing the company as a “key beneficiary” from a potential MDR on select UPI transactions. JM Financial also maintained its Buy rating and increased its target price to ₹1,950 from ₹1,500.

BofA said a potential MDR framework could create an incremental annual revenue opportunity of about ₹8,000 crore to ₹11,500 crore for the overall UPI ecosystem. Its analysis indicated potential upside of 18% to 24% to Paytm’s FY28 to FY30 earnings per share (EPS) estimates, assuming a 25 basis point MDR and an incremental net payment margin of around 2 to 3 basis points for Paytm.

“We consider Paytm to be a key beneficiary from MDR on UPI in our coverage universe,” BofA said in its report. The brokerage said Paytm’s position across merchant acquisition, consumer UPI and online payments processor could allow it to participate in the economics of UPI monetisation. It noted that Paytm is the largest name on the merchant acquiring front among UPI apps covered in its analysis.

JM Financial said potential UPI monetisation would open an earnings stream for Paytm that was previously unavailable, assuming a 25 basis point industry-wide MDR. On these assumptions, JM Financial estimated incremental revenue of about ₹200 crore in FY27 and ₹440 crore in FY28 for Paytm.

JM Financial said the development could lift its adjusted EBITDA estimates for Paytm by 8.9% in FY27 and 17.8% in FY28 from earlier estimates.

The brokerage said the potential change is significant because it could convert a “structurally zero-revenue GMV pool into monetisable volume at near-full EBITDA flow-through”, improve Paytm’s earnings mix without a corresponding increase in costs and materially reduce the regulatory overhang around UPI payments monetisation.

Both brokerages also pointed to strengthening trends in Paytm’s existing business. BofA said Paytm’s “core business momentum” remains strong, supported by strong momentum in Soundbox, merchant and consumer lending business with continued gains in UPI market share. It added that continued operating leverage and AI-led benefits could support further margin improvement.

JM Financial highlighted that Paytm’s UPI market share by value has increased for six consecutive quarters, rising from 5.57% in Q1FY26 to 6.96% in July 2026. Its estimates now imply Paytm revenue growth of 26.4% by FY27 end and 26.1% in FY28, with adjusted EBITDA margin rising to 14.5% and 20.4%, respectively.

With the final MDR rate, eligible merchant categories, transaction thresholds and revenue-sharing mechanism still to be determined, both brokerages cautioned that lower-than-expected MDR rates, a narrower eligible transaction base or increased competition could reduce the potential benefit.

Even so, the two reports indicate that UPI monetisation could add a new earnings lever to Paytm at a time when the business continues to be profitable and is already showing improving growth and operating leverage. (ANI)