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Paytm parent One97 Communication rallies after Bernstein lifts UPI outlook
Bernstein said shifting selected UPI merchant MDRs into its base case could lift Paytm net payment margins and raise FY30 EPS estimates by about 30%.
One97 Communications, the parent of Paytm, surged after Bernstein raised its target price, sending the stock up 10% on Monday, Aug. 10, to ₹1,598, a 54-month high. The shares have recovered 70% from their March low, with gains extending into the current month after also rising 18% so far.
Bernstein set a Street-high target of ₹2,200, retaining an Outperform rating and citing potential upside from higher UPI fees. The brokerage boosted its target by ₹700 from a prior projection of ₹1,500, implying roughly 38% upside from Monday’s closing price and noting the level is above Paytm’s IPO price of ₹2,150.
The firm’s view centers on UPI monetisation through merchant discount rate changes. Bernstein moved the merchant discount rate on selected UPI merchant transactions from an optional upside scenario into its base-case forecasts from FY28, estimating the change could improve Paytm net payment margins by 3-4 basis points.
Bernstein also linked its forecast to policy discussions, saying the government is considering introducing a nominal MDR on a limited set of UPI merchant transactions above a threshold, while keeping consumer and person-to-person UPI payments free. LiveMint Markets reported that improved regulatory conditions and better earnings visibility have helped investor sentiment as Paytm has regained momentum following earlier pressure.