Paytm Re-rating: Analysts See Valuation Upside

New Delhi, Nov 20 (PTI) Noida-based payments major Paytm's drive towards sustained profitability has started to show in market sentiment, with multiple brokerages acknowledging this shift and turning incrementally positive on the company over the past few quarters.

Recording profits for a second straight quarter, this consistency has not only strengthened its financial fundamentals but also led the market to steadily recognise its strong earnings potential, driving a multi-quarter re-rating in its stock by several leading brokerages, including JM Financial, Emkay, Jefferies and Bernstein, among others.

With this improving outlook, analysts indicate that the rerating cycle may still have room to run, as Paytm's valuation remains conservative compared to large internet peers such as Nykaa, FirstCry, PB Fintech, and Zomato.

Reflecting on the second quarter FY26 earnings, JM Financial said Paytm continues to hold 'attractive risk-reward at current market price'.

The brokerage, in a comparative valuation study, added that by the end of FY28, Paytm's earnings profile will strengthen materially, with Profit After Tax (PAT) expected to rise to Rs 2,484.7 crore, yet it is valued at a comparatively modest 28.4 times of FY28-end PAT, despite a much stronger earnings trajectory.

In contrast, several listed internet peers command far higher multiples. CarTrade, for instance, is projected to deliver Rs 387.2 crore in FY28 end PAT but is valued at 36.3 times the same.

PB Fintech is expected to post Rs 1,733.5 crore and is valued at 48.4 times the PAT.

Nykaa and Zomato are at the higher end of the valuation multiple, expected to end FY28 with a PAT of Rs 974.1 crore and Rs 1,492.1 crore, and are valued at 74.5 times and 202.1 times the same, respectively.

Analysts now see a strong scope for further value discovery for Paytm, with the company's consistent execution driving higher efficiency and sustained profit expansion.

Despite having one of the strongest PAT and revenue trajectories among major internet stocks, Paytm continues to command a market capitalisation of about Rs 86,100 crore compared to PB Fintech's Rs 89,000 crore and Zomato's Rs 3.02 lakh crore.

With profitability deepening and earnings visibility strengthening through FY26–FY28, brokerages argue that Paytm has scope to be valued better, especially against the significantly higher valuations commanded by most of its internet-sector counterparts.

Following Paytm's Q2 FY26 results, top brokerage firms, including Dolat Capital, Bernstein, JM Financial, Mirae Asset Capital Markets, Emkay Global and YES Securities, have reaffirmed their positive ratings, underscoring sustained investor confidence.

Analysts cited Paytm's strong operating performance, disciplined cost control, and growing contribution from AI-led products as the key enablers of its profitability and scalability.

While Bernstein raised its target price to Rs 1,600 and reaffirmed an ‘Outperform' rating, based on "accelerated improvement in margins" and "healthy GMV growth”, Emkay Global retained its Buy rating with a revised target price of Rs 1,600 (up from Rs 1,500), citing strong execution, expanding profitability, and a long runway for growth for the company.