Mutual Funds Bolster Stake in Paytm Amid Promising Growth Forecasts

Domestic institutions, particularly mutual funds, have increased their stake in Paytm, spotlighting the company's growth potential in India's digital payments landscape. Analysts foresee significant revenue and profit expansion as Paytm capitalizes on the evolving digital economy. The company's robust business model and strategic focus are pivotal to its sustained growth.

In a testament to its burgeoning prospects, domestic institutions led by mutual funds have ramped up their stake in the Indian mobile payments company, Paytm. Recent filings with exchanges reveal that mutual funds have increased their holdings by 1 per cent. Specifically, Mirae Asset and Nippon Mutual Funds have expanded their stakes to 4.49 per cent and 2.27 per cent, respectively.

Data from Dolat Capital for June to August underlines Paytm's steady position in India's digital payments ecosystem, pointing to a stable UPI share, robust merchant base, and growing partnerships. The firm projects that Paytm, positioned at the forefront of a boom in digital transactions, will see significant revenue growth over the next decade, with profits expected to rise from FY26 onwards. Emkay Global echoes this optimism, forecasting strong growth and the potential for Paytm's annual revenues to reach around Rs 100bn by FY28, surpassing operating costs by a significant margin.

Ventura has initiated coverage with a target price of Rs 1,170 within the next 24 months, underscoring Paytm's strong business model despite regulatory challenges concerning Paytm Payment Bank. The report highlights that with UPI as the dominant digital payment method and Paytm's soundbox and POS solutions becoming indispensable, the company is well-positioned to leverage digital payment trends. Analysts stress that Paytm's adaptability to regulatory changes, technological leverage, and merchant relationships are key to its sustained growth. With a focus on core payment services and diversification into financial services, Paytm is set to capture a significant slice of the expanding digital economy.

Financially, Paytm reported Rs 1,502 crore in operating revenue for Q1 FY25, supported by a robust cash balance of Rs 8,108 crore. The company expressed confidence in future revenue and profitability enhancements, driven by growth in key operating metrics like GMV, a growing merchant base, recovery in its loan distribution business, and cost optimization. Paytm remains committed to its core payments and financial services business. (ANI)

(With inputs from agencies.)