First ‘buy’ report on Paytm sees firm turning profitable by 2026

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, the third brokerage to initiate coverage on the digital payments giant after Macquarie Capital Securities and JM Financial Institutional Securities, 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 ($33.4), which is 16 per cent higher than the company’s issue price. Paytm dropped as much as 2.7 per cent to 1,592 rupees on Thursday, a fifth day of declines, after plummeting 37 per cent 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, 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, Warren Buffett’s Berkshire Hathaway and Jack Ma’s Ant Group Paytm reported its first financial results as a public company over the weekend, with losses widening to ~4.74 billion in the Julyseptember quarter from a year earlier amid rising expenses.