One97 Communications (Paytm) Stock Hits Multi-Year High on MSCI Inclusion and Strong Financials

Shares of One97 Communications, widely known as Paytm, reached a multi-year peak of ₹1,350.85 on the BSE during Friday's trading session, continuing a rally fueled by recent positive developments. The fintech firm's stock price has climbed approximately 6.5% over the past two trading days following the announcement of its inclusion in the MSCI Global Standard Index as part of the November review. This inclusion often attracts passive investment flows, boosting demand for the stock.

Paytm has demonstrated remarkable performance over the last six months, soaring by 53% compared to the BSE Sensex's modest 3% rise. The stock has more than doubled from its 52-week low of ₹652.30 touched on March 11, 2025, and is currently trading at its highest point since December 2021.

Analysts note that Paytm delivered a healthy second quarter (Q2FY26), largely meeting expectations. Its performance was supported by robust revenue growth and disciplined cost management, leading to a strong adjusted profit and steady progress towards sustainable profitability. Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) margins have improved, with consistent Gross Merchandise Volume (GMV) growth.

The company's payments business is expanding at a rate close to 20%. Notably, the payment processing margin improved in Q2FY26 due to increased traction from credit card usage on UPI and affordability solutions like EMIs, surpassing the guided 3 basis points (bps) mark. Improved pricing discipline with merchants also contributed to this margin expansion, according to Axis Securities.

Brokerage firms have reacted positively. Axis Securities maintained an 'ADD' rating with a revised price target of ₹1,400. JM Financial Institutional Securities reiterated a 'BUY' rating, setting a September 2026 target price of ₹1,470, valuing the company at 40 times its estimated September 2027 EBITDA.

Paytm reported a profit after tax (adjusted for exceptional items) of ₹210 crore and revenue of ₹2,060 crore, a 7% increase quarter-over-quarter (QoQ). Contribution Margin (CM) was maintained at 59%, and EBIDTAM rose by 320bps, with reported EBITDA nearly doubling QoQ to ₹140 crore. While Marketing Services revenue saw a sequential dip, Payments and Financial Services showed further momentum.

Motilal Oswal Financial Services slightly raised its contribution margin assumptions but maintained its NEUTRAL rating on the stock, reiterating profitability estimates despite a one-off impairment charge.

Impact This news is significant for Indian stock market investors as it signals strong operational performance and potential for increased investor demand due to index inclusion. The positive brokerage sentiment further supports the stock's valuation. The stock is likely to see continued interest and potential price appreciation. Rating: 7/10.

Difficult terms: Fintech: Refers to companies that use technology to provide financial services. MSCI Global Standard Index: A widely followed stock market index created by Morgan Stanley Capital International that represents large and mid-cap equities across developed and emerging markets. Inclusion can lead to increased buying pressure from index-tracking funds. Tepid market: A market that is experiencing slow growth, low trading volumes, and little price fluctuation. 52-week low: The lowest price a stock has traded at within the past 52 weeks (one year). IPO (Initial Public Offering): The process by which a private company first sells shares of stock to the public. Brokerages: Financial institutions that facilitate the buying and selling of securities for clients and may provide investment research and advice. Adjusted profit: A company's net profit after excluding unusual, infrequent, or non-recurring items. Sustainable profitability: The ability of a company to consistently generate profits over the long term. EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization): A measure of a company's operating performance. GMV (Gross Merchandise Volume): The total value of merchandise sold over a given period through an e-commerce marketplace, before deducting fees or commissions. Payment processing margin: The profit earned by a company on each transaction it processes. Credit card on UPI: A feature allowing users to link their credit cards to the Unified Payments Interface (UPI) platform for making payments. EMI (Equated Monthly Installment): A fixed amount paid by a borrower to a lender on a specified date each month. Basis points (bps): A unit of measure used in finance to denote the percentage of a basis point. One basis point is equal to 0.01% (1/100th of a percent). Contribution Margin (CM): The revenue remaining after deducting variable costs, which contributes to covering fixed costs and generating profit. EBIDTAM (EBITDA Margin): Calculated by dividing EBITDA by revenue, it indicates the profitability of a company's core operations relative to its sales. QoQ (Quarter-over-Quarter): A comparison of financial results from one quarter to the next. Opex (Operating Expenses): Ongoing costs incurred by a business to run its normal operations. Impairment charge: A reduction in the recorded value of an asset when its market value or recoverable amount falls below its book value.