Paytm Parent One97 Communications Receives Outperform Rating

Paytm, operating under the umbrella of its parent company One97 Communications, has gained an ‘Outperform’ rating from Bernstein, a prominent global investment research and brokerage firm. The firm has increased its target price for Paytm to Rs 2,200 from a previous Rs 1,500, primarily driven by the anticipated implementation of the Merchant Discount Rate (MDR) on UPI transactions. Bernstein has shifted the UPI MDR from being an “optionality” to a fundamental component in its forecasts starting from FY28. The firm estimates around a 35 bps MDR on selected UPI person-to-merchant (P2M) transactions.

Potential Gains from UPI MDR

Bernstein predicts that Paytm will capture approximately 3-4 bps of additional net payment margins from the UPI MDR. The brokerage projects that the introduction of MDR could result in EBITDA contributions of Rs 1,320 crore, Rs 1,690 crore, and Rs 2,160 crore for the financial years FY28E, FY29E, and FY30E, respectively. Additionally, Bernstein has raised its estimated earnings per share (EPS) for FY30E by around 30%, setting it at Rs 106. The expected growth in Paytm’s Gross Merchandise Value (GMV) is impressive, progressing from Rs 30.9 lakh crore in FY27E to Rs 56.6 lakh crore by FY30E.

Shifting Risks and Government Clarifications

According to Bernstein, the primary risk has transitioned from whether MDR will be implemented to the extent to which Paytm can maintain the published rate amidst competition in merchant acquisition and the pressures related to take rates. This news follows a government clarification stating that consumers will not incur charges for UPI transactions. If MDR is introduced, it will only apply to certain merchant transactions that exceed a specific threshold. The government has also emphasised the necessity for a sustainable revenue model to invest in UPI infrastructure, cybersecurity, and fraud prevention measures.

Paytm’s UPI Performance

As per NPCI data, in June 2026, Paytm was the third-largest player in the UPI space, recording 1.80 billion transactions. The fintech leader accounted for 7.92% of UPI transaction volume and 6.66% of transaction value, processing a total worth of Rs 1.93 lakh crore during that month. Paytm made its entry into the stock market in July 2021 at an issue price of Rs 2,150, a figure that the stock has yet to revisit since its initial listing. Currently, shares of Paytm are trading at Rs 1,558, having seen an increase of about 20% so far in 2026.