This new-age tech stock hits over 4-year high, recovers 70% from March lows. Are you holding it?

One97 Communications, the parent company of Paytm, saw its shares jump 10% in Monday's trade, 10 August, to a 54-month high of ₹1,598 apiece after global brokerage firm Bernstein raised its target price to a Street-high, citing the potential for the company to benefit from higher UPI fees.

The brokerage now sees the stock rising to ₹2,200 apiece, a level not seen since its listing and above its IPO price of ₹2,150 apiece. The revised target adds to the optimism around the stock, which has been on a strong winning streak since March, hitting multi-month highs.

Bernstein raised its target price by ₹700 from the previous projection of ₹1,500 while retaining its ‘Outperform’ rating. The new target implies an upside of around 38% from Monday's closing price.

The upgrade is primarily based on the potential for UPI monetisation. Bernstein has moved the merchant discount rate (MDR) on selected UPI merchant transactions from an optional upside scenario into its base-case forecasts from FY28.

The brokerage believes MDR could improve Paytm's net payment margins by 3-4 basis points, driving a 30% increase in its earnings per share (EPS) for FY30 compared with its previous forecasts.

The potential for UPI monetisation comes as the government is considering introducing a nominal merchant discount rate (MDR) on a limited set of UPI merchant transactions above a certain threshold, while assuring that consumer and person-to-person payments will continue to remain free.

Stock rebounds 70% from March lows

Although the stock remained under pressure during the first three months of 2026, it gained momentum in the following months, gradually recovering its losses and emerging as one of the year's top performers.

From its March low, the stock has recovered 70%, finishing each of the last four months in the green. The winning streak has extended into the current month, with the stock gaining another 18% so far.

Investor sentiment towards the fintech major has improved as regulatory headwinds that had weighed on the stock over the past two years have gradually eased. This has improved earnings visibility, while the company's plans to launch new products have further strengthened optimism on the Street.

Following the Reserve Bank of India's restrictions on Paytm Payments Bank in 2024, the company shifted its focus towards its core payments and financial services distribution businesses. It has also been driving growth by onboarding higher-quality merchants and expanding fee-based, scalable revenue streams.

The company expects to deliver stronger growth in FY27 than in the previous financial year, supported by gains in merchant and consumer payments market share and continued expansion of its financial services distribution business. It also expects margins to improve, aided by tighter control over indirect costs such as marketing and software expenses.

June quarter performance

For the June-ending quarter, the company reported a solid set of numbers, supported by healthy growth across its core businesses. Net profit jumped 79% year-on-year (YoY) to ₹220 crore, compared with ₹123 crore in the corresponding quarter last year. On a comparable basis, excluding the PIDF incentive, PAT surged 207% to ₹212 crore, from ₹69 crore a year ago.

Reported EBITDA surged 182% YoY to ₹203 crore, compared with ₹72 crore in the year-ago period, while the EBITDA margin expanded to 8% from 4%.

The company's revenue from operations rose 28% YoY to ₹2,448 crore, from ₹1,918 crore in the corresponding quarter last year, while increasing 8% sequentially from ₹2,264 crore in the March quarter.

The growth was primarily led by its Payment Services business, where revenue increased 33% YoY to ₹1,384 crore, supported by higher merchant payment volumes and continued expansion of its payments ecosystem.

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