Bernstein turns more bullish on Paytm after 'better-than-expected' UPI MDR

New Delhi: Global brokerage Bernstein has raised its earnings estimates for Paytm after the final UPI merchant discount rate framework came in better than expected, pointing to sharper monetisation of the company's payments business across both the consumer and merchant sides.

Bernstein said the framework gave consumer payment apps a better than expected deal, with consumer TPAPs or third party application providers, now earning a merchant discount rate broadly comparable to merchant apps, and their share of the MDR pool explicitly specified.

The brokerage said this greater certainty around consumer side economics is particularly relevant for Paytm, which participates on both the consumer and merchant sides of UPI payments.

For Paytm, Bernstein raised its assumed MDR take rate, the share of each transaction the company earns, on the consumer side to 8 basis points from 3 basis points earlier, and on the merchant side to 10 basis points from 9 basis points. Incorporating implementation from mid October 2026, the brokerage said these changes increase its FY27 earnings estimate by around 27 per cent.

The increase on the consumer side, to 8 basis points from 3 basis points, was the larger of the two revisions, bringing Paytm's assumed consumer economics closer to its merchant economics.

Bernstein estimates the overall UPI P2M revenue pool at around Rs 270 billion (Rs 27,000 crore) in FY28, with payment apps collectively retaining around 40 per cent to 45 per cent of the total MDR pool, an annual revenue opportunity of around Rs 110 billion (Rs 11,000 crore) to Rs 120 billion (Rs 12,000 crore) by FY28.

It expects UPI P2M transaction value to grow from around Rs 100 trillion (Rs 100 lakh crore) over the last twelve months to around Rs 115 trillion (Rs 115 lakh crore) in FY27 and Rs 144 trillion (Rs 144 lakh crore) in FY28, continuing to expand at around 27 per cent year-on-year.

The brokerage's analysis showed that UPI P2M transactions above Rs 2,000 account for a small share of transaction volumes but a much larger share of payment value. Such transactions made up around 4 per cent of UPI P2M volumes in August 2026 but around 67 per cent of transaction value.

Bernstein maintained its Outperform rating on Paytm with a target price of Rs 2,200 following the revised estimates, reflecting stronger assumed economics for the company across both consumer and merchant payments.

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