Paytm shares fall but Goldman Sachs still finds risk-reward favourable, sees stock past ₹2,000

Global investment banking firm Goldman Sachs has raised its price target on Shares of One 97 Communications, the parent company of payments aggregator Paytm, by 38% in its latest note on Thursday, October 8. The stock, having declined 10% in early trading, is looking to recover from the lows of the day.

Paytm’s intraday fall is the biggest that the stock has seen since February 14, 2024, when the stock had declined 10% as well.

While maintaining its “buy” rating on Paytm, Goldman Sachs revised its price target higher to ₹2,070, from ₹1,500 earlier. The revised price target implies an upside potential of 19.5% from Paytm’s closing levels on Wednesday.

With this, Goldman Sachs has become the 11th firm on the street who expects shares of Paytm to cross the mark of ₹2,000 per share. However, Goldman Sachs’ target is still below Paytm’s issue price of ₹2,150.

Emkay has the highest target on Paytm at ₹2,400, followed by Investec at ₹2,300 and Dolat Capital and Bernstein with ₹2,250 and ₹2,200 respectively.

Goldman Sachs said it likes Paytm for three key reasons:

• Underlying market share, revenue growth and margin momentum for the business remain strong, a trend that the firm expects to continue going forward.
• The recently announced UPI merchant discount rate (MDR) to drive up to 40% earnings before interest taxes depreciation (EBITDA) upgrades for Paytm — Goldman Sachs believes this is not fully reflected in the current share price. However, the stock is down today after CNBC-TV18 reported that the MDR implementation dates may be pushed back, citing sources in the know.
• It sees optionalities to Paytm’s earnings and multiples from scale up of postpaid, a potential rebalance of wallet and note that the next deadline for the implementation of a UPI market share cap is December 2026, which could be a material event for the company.

Goldman Sachs said it has incorporated the UPI MDR into its estimates and raised its earnings per share (EPS) estimates for the stock by up to 39%.

Sources told CNBC-TV18 that a request has been made to defer the rollout of the MDR by a few months and the proposal for the same is under consideration.

This led to shares of payment aggregators such as Paytm, Pine Labs, OneMowbikwik Systems to fall up to 10% on Thursday.

23 analysts cover Paytm, and none have a “sell” rating on the stock anymore. 18 have a “buy” rating and five others have a “hold” recommendation.

Shares of Paytm, having made an intraday low of ₹1,558.8, are recovering from the lows to trade 4.7% lower at ₹1,650.4. The stock is up 28% so far this year.

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