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Paytm, which has moved wildly since its listing after India’s largest initial public offering, has received the first buy rating from a brokerage that expects the company to turn profitable by March 2026.

Dolat Capital Market Pvt, the third brokerage to initiate coverage on the digital payments giant after Macquarie Capital Securities and JM Financial Institutional Securities Ltd., said its transition to a “manufacturer" of financial services from an agent, cross-selling of services, and strong growth in the number of users will help the company.

Paytm’s “super app" has emerged from a pure “want" category to reach to the “need" status, Dolat analysts, led by Rahul Jain, said. It positions the company as “one of the strongest digital brands to garner significant share of opportunities that will evolve in the Indian internet ecosystem," they said.

The brokerage has set a target price of 2,500 rupees ($33.4), which is 16% higher than the company’s issue price. Paytm dropped as much as 2.7% to 1,592 rupees on Thursday, a fifth day of declines, after plummeting 37% in the first two sessions of trading. JM Financial has a sell rating on the stock, while Macquarie has rated it as underperform. 

One 97 Communications Ltd., Paytm’s parent company, raised $2.5 billion in its IPO but its debacle of a debut made it one of the worst initial showings by a major technology firm since the dot-com bubble era of the late 1990s. Paytm has the backing of top global investors, including Masayoshi Son’s SoftBank Group Corp., Warren Buffett’s Berkshire Hathaway Inc. and Jack Ma’s Ant Group Co. 

Paytm reported its first financial results as a public company over the weekend, with losses widening to 4.74 billion rupees in the July-September quarter from a year earlier amid rising expenses. Its revenue rose more than 60%, boosted by strong growth in its financial, commerce and cloud services. 

The entry multiple for Paytm might appear steep, “however we see it as sustainable since it is the most impactful and real-economy internet business," the note said. 

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