PPBL developments won’t hurt Paytm; fresh growth avenues seen: Bernstein

Global brokerage Bernstein has reiterated its positive stance on One97 Communications Ltd. , the parent company of Paytm, saying latest developments involving Paytm Payments Bank Ltd. (PPBL) are unlikely to impact Paytm’s business and could instead create new regulatory opportunities for the company. 

The brokerage maintained its ‘outperform’ rating on Paytm with a target price of ₹1,500, implying an upside potential of around 31% from current levels. 

In its latest note, Bernstein said the regulator’s decision to cancel PPBL’s payments bank licence is only an incremental development, as Paytm had already established a clear operational separation between the payments bank and the parent company following regulatory action in early 2024. 

“There is unlikely to be any impact on the company’s numbers as the operations of PPBL have been suspended for more than a year,” Bernstein said. 

The brokerage also noted that Paytm had previously written off its investment in the payments bank, indicating that no one-time financial impact is expected from the latest move. 

Beyond the immediate impact, Bernstein sees potential strategic benefits for Paytm. According to the report, the development may pave the way for the company to seek alternative regulatory licences such as a Non-Banking Financial Company (NBFC) or Prepaid Payment Instrument (PPI) licence. 

Such licences could enable Paytm to expand its offerings across payment products, including digital wallets and credit solutions, while also supporting future margin expansion. 

Bernstein further highlighted that Paytm currently has no role in the management or board of PPBL despite being a shareholder, underscoring the operational independence of the two entities. 

The report added that Paytm’s core payments and financial services ecosystem remains strong and unaffected, with the regulatory action restricted solely to the payments bank entity. 

Following the development on Friday, Paytm informed stock exchanges that it has no exposure to PPBL or any material business arrangements with the banking entity. 

The company has clarified that none of its services are dependent on PPBL and that all offerings—including the Paytm app, Paytm UPI, Paytm Gold, Paytm QR, Paytm Soundbox, card machines, payment gateway, and Paytm Money—continue to operate without interruption.