New Delhi [India], October 7 (ANI): Global brokerage Investec has named One 97 Communications Ltd, the parent company of Paytm, among its 'Quarterly Alpha' picks for the upcoming quarter. It expects the fintech giant to post a 78% jump in EBITDA to Rs 2.5 billion (Rs 250 crore) and a 28% rise in net revenue for the quarter ending September, driven by strong GMV growth and continued momentum in its financial services business.

The list, released on October 7, comprises stocks from the brokerage's India coverage universe, with Paytm featuring alongside 14 other stocks, including L&T, TCS, Bajaj Finance and Union Bank of India.

In its note, Investec said it expects Paytm to deliver a strong second quarter of FY27, ending in September. It forecasts 30% year-on-year growth in gross merchandise value (GMV) and a 28% rise in net revenue, excluding PIDF and UPI incentives. 

The brokerage also expects Paytm's financial services distribution business to maintain its growth momentum, with revenue from the segment forecast to grow 41% year-on-year in the September quarter. 

Investec noted that the segment has recorded 35-45% year-on-year revenue growth over the past three quarters, while a benign asset quality environment remains supportive of the company's loan distribution business.

Investec also highlighted the introduction of UPI merchant discount rate (MDR), applicable from October 15, as an additional revenue stream for Paytm. The brokerage has retained a 'Buy' rating on Paytm and set a target price of Rs 2,300, implying a forecast total return of 35.7% from its reference price of Rs 1,695. It said Paytm's current valuations are attractive given the earnings momentum and long-term growth opportunity. 

Investec is also more bullish than consensus on Paytm's earnings, with its EBITDA estimates 2-9% ahead of consensus for FY27-29. It expects EBITDA to rise from Rs 14.3 billion (or Rs 1,430 crore) in FY27 to Rs 43.1 billion (Rs 4,310 crore) by FY29, reflecting the brokerage's expectations of a strong earnings trajectory. (ANI)

The Investec outlook comes amid Paytm's strong performance over the last few quarters. The company reported a 28% year-on-year rise in revenue from operations to Rs 2,448 crore, while Profit After Tax (PAT) rose 79% to 220 crore. It also reported its highest ever quarterly EBITDA of Rs 203 crore, on back of acceleration in revenue growth and margin expansion. 

Consumer UPI gross transaction value (GTV) grew 45% year-on-year to Rs 5.9 lakh crore, while monthly transacting users rose to 8 crore, providing a strong base for growth in the quarters ahead. (ANI)