Paytm Stock Surges on Goldman Sachs Bullish Outlook
Shares of One 97 Communications, the parent company of digital payments giant Paytm, experienced a significant upswing on Friday, November 28, climbing 3.4% to reach ₹1,325 per share. The stock hit an intraday high of ₹1,336 as investor sentiment received a substantial boost from global brokerage firm Goldman Sachs' optimistic assessment.
Goldman Sachs Turns Bullish with Major Target Price Revision
In a dramatic shift in stance, Goldman Sachs upgraded its rating on Paytm from 'Neutral' to 'Buy' and implemented a massive 123% increase in its 12-month target price, raising it from ₹705 to ₹1,570 per share. The brokerage outlined even more ambitious scenarios, projecting the stock could reach ₹1,870 in its bullish outlook and potentially soar to ₹2,320 in a blue-sky scenario, representing a 79% upside from current levels.
The brokerage firm highlighted that the regulatory environment, which had previously weighed heavily on the stock, is now showing incremental improvement. This positive shift is expected to support the early signs of recovery in Paytm's payments market share, strengthen earnings visibility, and enable the relaunch of key products that had been affected by regulatory actions.
Overcoming Regulatory Hurdles and Market Share Recovery
Goldman Sachs identified three major regulatory challenges that Paytm has navigated in recent years: the 2022 online merchant onboarding ban, the RBI's 2023 restrictions on unsecured lending, and the 2024 ban on Paytm Payments Bank (PPBL). The brokerage believes these issues are now largely in the past, with the company beginning to regain its footing in the competitive digital payments landscape.
Recent quarters have already shown promising signs, with Paytm's UPI and overall payments market share demonstrating recovery. Goldman Sachs expects this positive momentum to continue, particularly following the recent online payment aggregator authorization. The brokerage anticipates Paytm will intensify its customer acquisition efforts, further strengthening its market position.
Strong Financial Projections and Operational Improvements
Looking ahead, Goldman Sachs projects 20-25% annual revenue growth for Paytm over the next 2-3 years. On the operational front, the brokerage has raised its FY26-30 EBITDA estimates by at least 45%, resulting in substantial earnings per share (EPS) upgrades.
These upward revisions are driven by three key factors: sustained improvement in both direct and indirect cost control measures, reduced ESOP expenses after the founder forgone his grants, and strong performance in high-margin devices and the merchant lending business.
Remarkable Recovery from Record Lows
Paytm's stock has staged an impressive turnaround after facing significant challenges following its IPO. The company's consistent strong monthly performances have brought relief to early investors and more than tripled investments for those who entered the stock in the second half of last year.
The improved financial performance stems from Paytm's sharper focus on its core business, effective cost-cutting measures, and the strategic closure of non-core segments such as ticketing. These moves have been well received by market participants.
After plunging to an all-time low of ₹310 in May 2024, the stock has demonstrated remarkable resilience, staging a strong recovery in subsequent months and maintaining that momentum to achieve a 327% gain from its lowest point. Over the last 18 months, Paytm shares have ended 15 months in positive territory, including an impressive nearly 18% jump in July, reflecting consistent investor confidence and robust operational execution.
