Bernstein, a global investment research and brokerage firm, has retained its ‘Outperform’ rating on Paytm parent One97 Communications and raised its target price to Rs 2,200 from Rs 1,500 on the potential introduction of Merchant Discount Rate (MDR) on UPI transactions.

The brokerage has moved UPI MDR from an “optionality” to its base case from FY28 in its estimates. It assumes around 35 bps MDR on a subset of UPI person-to-merchant (P2M) transactions.

Bernstein expects Paytm to capture around 3-4 bps of incremental net payment margin from UPI MDR. The brokerage estimates that MDR could add Rs 1,320 crore, Rs 1,690 crore and Rs 2,160 crore to EBITDA in FY28E, FY29E and FY30E, respectively.

It has also raised its FY30E EPS (estimated earnings per share) by around 30% to Rs 106. Bernstein expects Paytm’s GMV to increase from Rs 30.9 lakh Cr in FY27E to Rs 56.6 lakh Cr by FY30E.

According to the brokerage, the key risk has now shifted from whether MDR will be introduced to how much of the published rate Paytm can retain amid competition in merchant acquiring and pressure on take rates.

The development comes after the government clarified that consumers will not be charged for UPI transactions. Any MDR, if introduced, will apply only to select merchant transactions above a certain threshold. The government also said a sustainable revenue model is needed to support investments in UPI infrastructure, cybersecurity and fraud prevention.

Paytm remained the third-largest UPI player in June 2026, with 1.80 billion transactions, according to NPCI data. The fintech major accounted for 7.92% of UPI transaction volume and 6.66% of transaction value, processing transactions worth Rs 1.93 lakh crore during the month.

Paytm made its stock market debut in July 2021 at an issue price of Rs 2,150, a level the stock has not revisited since its listing. Shares of Paytm are currently trading at Rs 1,558. The stock has gained around 20% so far in 2026.