New Delhi: A Citi Research report has reaffirmed Paytm’s strong presence in India's digital payments landscape, despite changes in the government’s UPI subsidy policies. The report suggests that while the UPI incentive allocation has been reduced to Rs 1,500 crore for FY25, this shift could pave the way for the introduction of a Merchant Discount Rate (MDR) on large-ticket transactions. Such a move may prove beneficial for fintech firms like Paytm, enhancing their revenue potential.
Stable Market Share and Growing Merchant Payments
According to the report, Paytm has maintained a stable market share of 5.3 per cent in UPI transactions, showcasing its resilience in a highly competitive sector. The broader UPI merchant payment ecosystem continues to expand, registering a 23 per cent year-on-year growth in February 2025. Paytm’s extensive merchant network and its diversified financial services portfolio position it well to capitalize on this growth.
Citi’s Rs 1,000 Target Price Suggests Upside
Citi analysts have set a target price of Rs 1,000 per share for Paytm, implying a potential upside of 31.1 per cent from its current levels. The report emphasizes that Paytm’s strategic cost management efforts and its expansion into financial services could significantly contribute to its long-term profitability. As digital transactions in India evolve, the company’s adaptability to regulatory changes and its pursuit of new revenue streams strengthen its growth outlook.
Regulatory Shifts Could Benefit Paytm
With the Indian government considering the implementation of MDR on high-value UPI transactions, Paytm stands to benefit from a potential revenue boost. The report underscores the fintech leader’s well-established user base, advanced technology infrastructure, and an expanding suite of financial services as key factors supporting its growth trajectory.
Stock Performance and Market Reaction
Despite Citi’s optimistic outlook, Paytm’s stock faced selling pressure in the latest trading session. Shares of One 97 Communications Ltd, Paytm’s parent company, closed at Rs 733.15, down Rs 29.95 or 3.92 per cent. At one point, the stock fell nearly 6 per cent during the session. However, analysts believe that Paytm’s long-term fundamentals remain strong, and the company is well-positioned to navigate regulatory shifts while unlocking new growth opportunities in India’s digital payments sector.
