Strong Q1 aside, Paytm needs AI revenue to unlock further upside

Paytm's Q1FY27 results showed strong growth with GMV up 31% year-on-year at about Rs 7.1 trillion and comparable Ebitda jumping 182% to Rs 203 crore, with margin expanding 700 bps to 8%. Financial services distribution income rose 45% to Rs 814 crore, while the stock fell 4% post-results amid profit booking after an 18% July rally. The company targets 15-20% Ebitda margin over the next couple of years, but analysts flag rich valuation at 45-46x FY28 P/E and competition from Jio Financial, Groww, and Zerodha.