Paytm shares: Fintech stock jumps nearly 7% after Q4 results. Here's what analysts say

Shares of One97 Communications, the parent company of the payments platform Paytm, rose nearly 7% on Wednesday, May 7, following the release of its fourth-quarter results after the market closed on Tuesday evening. The fintech company reported a reduced consolidated loss of ₹545 crore for the quarter ending March 31, 2025, attributed to a decrease in payment processing fees and employee benefits.

During the reported period, the company recorded a notional loss of ₹522 crore, which was a result of the accelerated expense for the employee stock ownership plan (ESOP) amounting to ₹492 crore, along with ₹30 crore related to impairments after Paytm CEO Vijay Shekhar Sharma voluntarily returned 2.1 crore shares he received as part of the ESOP.

Excluding the one-time loss of ₹522 crore, the company reported a loss of ₹23 crore for the quarter ending in March.

Revenue from operations fell by 15.7% to ₹1,911.5 crore in the quarter, down from ₹2,267.1 crore in the March 2024 quarter. In the fourth quarter of FY 2025, the company reported operating revenue of ₹1,911 crore, benefiting from increased revenues in financial services distribution and ₹70 crore in UPI incentives for FY 2025, as stated in its filing.

The total sales represented by gross merchandise value (GMV) from the Paytm platform increased by approximately 19%, reaching ₹5.1 lakh crore in the March 2025 quarter, compared to ₹4.3 lakh crore year over year.

Here's what brokerages say

According to a report from brokerage Motilal Oswal Financial Services, Paytm experienced a year of improvement in its business metrics throughout FY25. The recovery in disbursements is progressing well, driven by strong lending performance in merchant loans. Additionally, GMV showed a consistent recovery trend.

“We maintain our contribution profit estimates and project PAYTM to turn EBITDA positive by FY27. We value Paytm at ₹870 based on 18x FY30E EBITDA discounted to FY26E, which corresponds to 5.2x FY26E sales. We reiterate our NEUTRAL rating on the stock,” said the brokerage.

Brokerage JM Financial has maintained a 'Buy' recommendation and increased the target price to ₹1,070 from ₹1,000. With challenges behind and Adjusted EBITDA profitability achieved, the brokerage expect Paytm to maintain its growth while continuing to manage costs effectively.

Although their revenue projections remain stable and the effect of reduced UPI incentives will be offset by a modest increase in indirect expenses, the decline in ESOP expenses will lead to a significant rise in PAT profitability. The brokerage also anticipates that Paytm will gain advantages from beneficial network effects, appropriate for a platform, leading to substantial margin improvement.

Disclaimer: The views and recommendations above are those of individual analysts, experts and broking companies, not of Mint. We advise investors to check with certified experts before making any investment decision.