Paytm’s Phoenix moment: Why Emkay and JM Financial see up to 34% upside after a record ‘turnaround year’

Despite continued concerns around incentives and promotional spending, brokerage houses Emkay Global and JM Financial have retained positive views on the stock.

Both brokerages believe Paytm’s improving profitability, growth in financial services and rising market share in Unified Payments Interface (UPI) payments are key reasons behind their bullish stance.

Emkay, JM Financial remain positive on Paytm

Brokerage house Emkay Global has maintained a ‘Buy’ rating on Paytm with a target price of Rs 1,500. This implies an upside potential of nearly 25% from the current market price.

JM Financial has also retained its ‘Buy’ rating on the fintech stock and fixed a target price of Rs 1,490. According to the brokerage estimate, this suggests an upside potential of nearly 34%.

Brokerages see improving profitability trend

According to the brokerage reports, Paytm’s Q4 numbers reported a stable operational performance despite the absence of some incentives linked to digital payments.

As per the brokerage reports, the company’s revenue growth remained healthy due to expansion in lending, merchant payments and subscription devices.

The brokerages also believe Paytm’s focus on customer acquisition and cross-selling financial products could support earnings growth over the next few years.

Let’s take a look at what Emkay Global and JM Financial are saying about the fintech company and the major factors driving their outlook.

Emkay on Paytm: Financial services business drives growth

According to the Emkay report, Paytm’s Q4FY26 revenue came in ahead of Street expectations.

The brokerage stated, “Financial services reporting a strong 11.6% QoQ growth.”

Paytm reported revenue of around Rs 2,260 crore during the quarter, reflecting growth of 18.5% year-on-year.

The report noted that financial services revenue grew 37.6% year-on-year, while payment services revenue increased 16.1%.

Emkay also highlighted that Paytm’s Earnings Before Interest, Taxes, Depreciation and Amortisation (EBITDA) stood at around Rs 132 crore, broadly in line with market estimates.

Emkay on Paytm: Promotional spending helping UPI market share gains

According to the brokerage report, Paytm has increased promotional and cashback spending to improve customer engagement and expand its UPI market share.

Emkay stated, “Higher promotional and cashback expenses are driving consumer engagement, which has helped the company gain UPI market share.”

The brokerage also pointed out that Paytm’s cash reserves improved further during the quarter. According to the report, cash on books increased to nearly Rs 13,300 crore from around Rs 12,900 crore in the previous quarter.

Emkay on Paytm: Operating leverage seen as a key earnings trigger

Emkay believes Paytm’s profitability could improve sharply over the next few years due to operating leverage and revenue growth.

The brokerage stated, “FY26 has been a turnaround year for Paytm.”

According to the report, the company’s EBITDA improved to around Rs 500 crore in FY26 compared to a loss of around Rs 1,510 crore in FY25.

The brokerage expects Paytm’s revenue to grow 25% annually on a compounded basis between  FY26-FY28.

JM Financial on Paytm: Core payments business remains strong

As per JM Financial report, Paytm’s core payments business continues to witness strong growth despite the discontinuation of some incentives.

The brokerage stated, “Core Payments business sustains growth momentum.”

As per the report, Paytm’s payments Gross Merchandise Value (GMV) rose 27% year-on-year to nearly Rs 6.5 lakh crore during the quarter.

The brokerage also highlighted that payment processing margins remained above 4 basis points, which was better than earlier guidance.

According to JM Financial, the company’s device subscriptions also touched an all-time high of around 1.51 crore.

JM Financial on Paytm: Financial services and artificial intelligence focus

JM Financial believes the company’s financial services business remains another major growth driver.

According to the brokerage report, financial services revenue rose around 38% year-on-year, supported by merchant loans and improving loan penetration among merchants.

The brokerage also highlighted Paytm’s growing focus on artificial intelligence-led products and merchant commerce solutions.

JM Financial stated, “AI-led operating leverage will help EBITDA margin expansion.”

The brokerage believes future growth could also benefit if regulatory developments around wallet services and Merchant Discount Rate (MDR) on UPI transactions become favourable.

What investors need to know

According to the brokerage reports, Paytm continues to face near-term pressure from higher promotional spending and uncertainty around incentives linked to digital payments.

However, both Emkay and JM Financial believe the company’s long-term growth opportunity remains intact due to rising digital payments adoption, growth in lending products, stronger merchant ecosystem and improving profitability trends.

However, though share price has run up over 44% in the last 1 year, it is still well below its listing price of Rs 1,955 per share

Disclaimer: The stock analysis and target prices mentioned in this report are based on views from specific brokerage houses and do not constitute an offer, solicitation, or recommendation by this publication to buy, sell, or hold any security. Investors are advised to consult with a SEBI-registered investment advisor before making any financial decisions, as market conditions and company valuations remain subject to significant volatility. While based on earnings filings, future projections and price targets are speculative and not a guarantee of specific returns.

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