Jefferies Maintains 'Buy' on Paytm Despite RBI Incentive Loss, Cites Strong Core Business

• Jefferies maintains a 'Buy' rating on Paytm, emphasizing the strength of its core business despite the non-renewal of RBI's Payments Infrastructure Development Fund (PIDF) scheme.
• The discontinuation of PIDF incentives, which contributed significantly to adjusted EBITDA (Rs 1.28 billion in 1HFY26), has led to reduced earnings estimates and a lower price target.
• Despite the short-term earnings impact, Jefferies highlights that the issue is incentive-driven, not a reflection of weakness in Paytm's underlying operations.
• Paytm's core payments and financial services are expected to drive revenue growth at a 23% CAGR from FY26-FY28, with stable contribution margins around 58%.
• Operating leverage is projected to improve adjusted EBITDA margins to nearly 17% by FY28, with net profit scaling meaningfully, reinforcing a positive long-term outlook.

Why It Matters: Jefferies reaffirms 'Buy' on Paytm, citing strong core business and growth despite short-term incentive loss.