Paytm shares slip despite Q2 profit - Analysts see up to 33% upside going forward

What happened

Paytm parent One 97 Communications reversed early gains on October 27 even after a strong September quarter. Revenue rose 28.5% to ₹2,648 crore and net profit reached ₹225 crore, but analysts weighed higher costs and a slowdown in payment volumes.

Confirmed

Global impact / market context

Profit growth came with rising costs and slower payment volumes, so investors questioned whether earnings can keep improving. If payment margins stay thin, future profit may depend more on financial services and marketing revenue, which changes the risk profile of owning the stock.

Analyst inference

Analysts see up to 33% upside, suggesting some believe the share drop overstates concerns about costs and payment volume growth. The debate is whether new payment fees, which means charges on some UPI merchant transactions, can widen margins enough to support higher valuations.

Analyst inference

What to watch

1. Watch whether Paytm converts expected merchant discount rate, which means a fee on some UPI person-to-merchant payments, into actual payment margin gains. Confirmed
2. Track payment volume growth and cost trends next quarter, because slower volumes plus higher costs would pressure profit even if financial services revenue keeps growing. Analyst inference
3. Monitor whether analysts' upside targets hold if payment margins improve; a clear fee-driven margin gain could support revenue and profit expectations. Proposed

Evidence

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