Paytm gains from dual levers of consumer, merchant monetisation under UPI MDR

Axis Capital said Paytm gains from the dual levers of consumer and merchant side monetization and estimated a potential upgrade of up to 40 per cent to its FY28 EBITDA estimate. The brokerage described consumer payment companies as surprise winners, estimating a potential revenue pool of around Rs 4,500-6,000 crore, within an overall MDR revenue pool of around Rs 15,000-18,000 crore annually.

Axis Capital also said a higher contribution from payments to EBITDA could be a key trigger for a rerating, as the payments business is sticky, recurring and with large operating leverage.

JPMorgan said Paytm monetises two parts of its business, acting as both a third-party application provider and an acquiring payment aggregator. It estimated that incorporating MDR revenues across both transaction legs could drive a 35-54 per cent upgrade to Paytms EBITDA and earnings per share over FY27-FY29.

JPMorgan estimated around Rs 800 crore of annualised MDR revenue for Paytm in FY27, while putting the industry UPI MDR revenue pool at around Rs 17,000 crore on a run-rate basis. It expects Paytms two payment businesses together to earn 20-30 per cent of the 40 basis point MDR.

Investec described the final framework as more favourable than our earlier expectations and said Paytms merchant acquiring strength could enable it to capture around 10 basis points within the MDR pool, assuming around 30 per cent of its UPI gross merchandise value is eligible for MDR.

The brokerage raised its FY28 EBITDA estimate for Paytm by 41 per cent and its FY29 estimate by 35 per cent, while increasing its profit-after-tax estimates by 38 per cent and 33 per cent, respectively. Its FY28 base case includes around Rs 8.4 billion of net EBITDA accretion from UPI MDR.

Jefferies said the announced MDR of 40 basis points was higher than its earlier expectation of 25 basis points. It estimated the industry revenue opportunity at around Rs 15,000-18,000 crore and raised Paytms FY28 and FY29 earnings estimates by a further 10-12 per cent, while lifting its FY27 profit estimate by 18 per cent.

Jefferies also estimated the net P2M MDR impact in FY28 at around 31 per cent of Paytms EBITDA and profit before tax.

Across the four brokerages, the common view was that the final MDR framework was stronger than expected and could make UPI payments more monetisable for Paytm, with its presence across consumer and merchant payments positioning it to capture a larger share of the new revenue pool. (ANI)