Brokerage firm Nomura has started tracking One 97 Communications, the owner of Paytm, with a 'Buy' rating and a price target of Rs 2,250. Analysts project sharp earnings growth driven by AI efficiencies and lending. Despite recent market volatility, the stock has gained over 31% so far in 2026, significantly outperforming the Nifty 50 index.
Brokerage firm Nomura has initiated coverage on One 97 Communications, the parent company of the Paytm brand, assigning a 'Buy' rating and a target price of Rs 2,250. This development comes as the stock has shown notable strength in 2026, rising over 31% year-to-date, even as the benchmark Nifty 50 index has faced a decline of more than 12% during the same period.
The brokerage’s positive outlook relies on a projected 96% compound annual growth rate in EBITDA—a measure of core operating profit—between financial years 2026 and 2029. Analysts believe the company can achieve this by using artificial intelligence to streamline operational costs and by scaling its merchant lending operations. The core thesis is that the company will achieve 'operating leverage,' a business situation where revenue increases significantly faster than the expenses required to generate that revenue.
A significant factor noted in the report is the potential implementation of merchant discount rates (MDR) on select Unified Payments Interface (UPI) transactions. While the National Payments Corporation of India has deferred the new fee structure until after the festive season, it remains a potential revenue driver for payment players. Under the proposed framework, merchants could be charged a 0.4% fee on UPI transactions exceeding Rs 2,000, although essential services like fuel and insurance are expected to be exempt from this charge.
Despite the optimistic projections, the report highlights several risks that could impact these targets. Nomura warned that the quality of the company’s lending portfolio is a critical factor; any increase in 'bad loans' could hurt the overall growth trajectory. Additionally, the Indian fintech sector remains highly competitive, with multiple banks and technology companies vying for market share, which can put significant pressure on profit margins. The valuation of Rs 2,250 per share is based on an estimated FY29 enterprise value-to-EBITDA multiple.
For investors, the ultimate realization of the brokerage's target will depend on how well the company manages these operational goals in a constantly changing regulatory environment. Key factors to track in the coming quarters include the actual performance of the loan book, the effectiveness of AI-driven cost management, and any formal updates from regulators regarding the UPI fee structure. The company's ability to maintain high growth while navigating intense industry competition will remain the primary monitorable for shareholders.