Shares of One 97 Communications Ltd, the parent company of fintech giant Paytm, have surged by over 34% in the last three months, hitting a fresh 52-week high. The significant rally follows the company's robust financial performance for the quarter ended June 30, 2026 (Q1 FY27).
Strong Q1 Financial Performance Drives Growth
Paytm announced impressive consolidated net profit figures, which climbed 79% year-on-year to Rs 220 crore for the June 2026 quarter, compared to Rs 123 crore in the corresponding period last year. Operational revenue also saw a healthy increase of 28% year-on-year, reaching Rs 2,448 crore during the April-June period, up from Rs 1,918 crore a year earlier.
The company attributed this strong performance to several key factors, including a higher volume and value of payment transactions, significant growth in merchant subscriptions primarily driven by its Soundbox devices, and increased revenue from the distribution of financial services, particularly personal and merchant loans.
Stock Performance and Analyst Perspectives
Following these positive results, Paytm's stock gained 3.40% in Tuesday's trading, reaching a new 52-week high of Rs 1,638.80. The stock was last observed trading 1.52% higher at Rs 1,609, marking a 34.36% gain over the past three months.
Expert Views on Paytm's Trajectory
Kranthi Bathini, an Equity Strategist at WealthMills Securities, commented positively on Paytm's Q1 earnings, suggesting that investors with a high-risk appetite might consider buying the stock on dips.
From a technical standpoint, AR Ramachandran, a Sebi-registered research analyst at Tips2trades, noted that while Paytm is currently bullish, it is also highly overbought on daily charts. He identified the next resistance level at Rs 1,664 and advised investors to consider booking profits. Ramachandran warned that a daily close below the support level of Rs 1,502 could trigger a significant fall towards Rs 1,224 in the near term.
Bernstein Raises Target Price Amidst UPI MDR Discussions
Global brokerage firm Bernstein has maintained its 'Outperform' rating on Paytm and significantly raised its target price to Rs 2,200 from the previous Rs 1,500. This revised target now surpasses Paytm's initial public offering (IPO) price of Rs 2,150 for the first time.
Bernstein's optimistic outlook factors in the potential introduction of a merchant discount rate (MDR) on UPI transactions, which it expects to be implemented from FY28E. The brokerage's report stated, "We are incorporating the MDR introduction on UPI transactions into our base case from FY28E onwards. We think MDR could lift net payments margins by 3-4 bps, driving a 30% increase in FY30E EPS."
This view aligns with recent discussions from the Ministry of Finance regarding the possibility of introducing MDR on UPI transactions. The proposed framework under consideration involves an MDR of 0.3% to 0.5% for transactions exceeding Rs 2,000, specifically targeting larger merchants above a certain turnover threshold. Small shopkeepers and everyday consumer-to-consumer transfers are expected to remain exempt from this proposed charge.