Brokerage firm Bernstein has increased its target price for Paytm’s parent company, One97 Communications, to INR 1,200 from INR 1,100. They have kept an ‘outperform’ rating and labelled the stock a ‘long-term’ buy.

As per a report by NDTV Profit, Bernstein continues to have a positive outlook on Paytm’s long-term prospects.

This follows regulatory relief for Paytm and its consistent profitability, which Bernstein suggests could lead to significant growth in the coming years.

“Although we perceive the potential for significant earnings or revenue surpasses relative to consensus in the short term as limited, we maintain a positive outlook due to various catalysts that can promote long-term growth,” the firm reportedly stated in a note.

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In the first quarter of FY26, the company, which is led by Vijay Shekhar Sharma, became profitable. It reported a consolidated net profit of INR 122.5 Cr, compared to a net loss of INR 840.1 Cr in the same quarter last year.  In the previous March quarter, the company reported a net loss of INR 544.6 Cr.

According to the brokerage note, Paytm’s shares soared to INR 1,282.35 during today’s intraday trading session on the BSE.  At 2:47 PM, however, it was trading at INR 1,253.70, a decrease of 1.76%.

One of the positive prospects for the fintech major is the potential reintroduction of Paytm’s Buy Now Pay Later (BNPL) product, which could enhance its earnings.  The brokerage firm reportedly noted, “Scaling the BNPL product back to 75% of peak volumes (2023 levels) could add 26% to our FY27E EPS estimate.”

“Moreover, the likely recommencement of Paytm Payments Banks Ltd operations could serve as a significant impetus, alleviating regulatory difficulties and facilitating more advantageous approvals,” it added.

Bernstein pointed out that a possible NBFC licence could result in financial services contributing twice as much and could lead to an increase of up to 70% in Bernstein’s FY30E EPS estimate.

Paytm’s wallet services may experience a revival, but Bernstein anticipates that the emergence of RuPay credit cards on UPI and UPI Lite will have a limited effect on earnings.

“However, if it is relaunched after Paytm obtains its own PPI (prepaid payment instrument) license, it would further alleviate the regulatory overhang,” stated the brokerage firm.

In particular, Paytm’s board has sanctioned an investment of INR 300 Cr in its investment tech subsidiary, Paytm Money, to enhance its revenue streams.  Paytm Money operates within the realm of investment and wealth management services, offering stock broking, mutual fund distribution, and other services.

In pursuing its goal of becoming a super app, Paytm expanded into various areas beyond its limits.  It has provided the company with a reason to reassess its business priorities and withdraw from non-core segments due to the regulatory clampdown.

Last August, One97 Communications divested its entertainment ticketing business, which included Paytm Insider and TicketNew, to Zomato.  After a period of four months, Paytm divested its stake in the Japanese payment firm PayPay, which it owned via its subsidiary Paytm Singapore, selling it to SoftBank.

After encountering regulatory scrutiny, these sales formed a component of Paytm’s strategy to divest non-core assets and concentrate on its primary payments and financial services operations.

Sharma remarked at that time, “Our core business is payments, and the merchant side remains robust.  Nevertheless, we lost a considerable portion of our consumer base because of regulatory constraints.  Going forward, we plan to reinvest in the consumer payments sector.

In Q1 FY26, Paytm’s operational revenue rose by 28% to INR 1,918 Cr, compared to INR 1,502 Cr in Q1 FY25.  Compared to the operating revenue of INR 1,911 Cr in Q4 FY25, it was nearly flat.

Following its Q1 financial results, brokerage firm Jefferies raised its target price for Paytm and upgraded its rating from ‘hold’ to ‘buy’.  Jefferies has increased its target price for Paytm from INR 900 to INR 1,250 per share.

A few weeks back, the Reserve Bank of India (RBI) provided in-principleapproval for Paytm’s subsidiary, Paytm Payments Services Limited (PPSL), to function as a payment aggregator (PA).