Paytm’s Profit Pivot: Motilal Oswal Sees Zomato-Style Turnaround in the Making

Motilal Oswal Financial Services has drawn a compelling parallel between Paytm’s profitability trajectory and that of Zomato and PB Fintech, both of which saw dramatic stock re-ratings after turning profitable. In a detailed July 2 report, the brokerage firm highlighted Paytm’s disciplined execution, expanding financial services footprint, and AI-led cost efficiencies as key drivers of its transformation into a sustainably profitable tech platform.

 

Despite regulatory headwinds and a sharp drop in UPI incentives—from ₹2.9 billion in FY24 to ₹700 million—Paytm has maintained momentum through its dual-core strategy of payments and financial services. Contribution margins are projected to cross 55% by FY26 and expand to 58% by FY28, with adjusted EBITDA expected to turn positive in FY26.

 

Key Highlights:

 

- Profit Forecast: PAT projected at ₹16.2 billion by FY28.

- Revenue Mix Shift: Financial services to contribute 27% of revenue by FY28, up from 25% in FY24.

- Merchant Ecosystem: 44 million merchants onboarded; 12.4 million devices deployed as of Q4 FY25.

- Lending Growth: Disbursements expected to grow at 35% CAGR; GMV at 23% CAGR from FY25–28.

- Valuation Call: Target price revised to ₹1,000, valuing Paytm at 20x FY27E EBITDA.

- Peer Benchmarking: Zomato and PB Fintech delivered 245% and 156% returns respectively post-profitability.

 

While Motilal Oswal maintains a Neutral rating due to regulatory uncertainties, it underscores Paytm’s strong cash reserves of ₹156 billion and clear glide path to profitability as catalysts for potential re-rating.

 

Sources: Motilal Oswal, Economic Times, WebIndia123