Shares of One 97 Communications (Paytm) closed sharply higher on Friday as global investment-banking giant Goldman Sachs raised its 12-month price target for the fintech major by a massive 123% sending a strong positive signal to the markets. Paytm rallied by 3.4% or ₹45 to ₹1325 on Friday intraday hitting a high of ₹1336. In a note to clients Goldman Sachs upgraded its rating on the stock to “Buy” from “Neutral” and hiked the target price to ₹1570 per share from an earlier ₹705. What made Goldman so bullish? In a note to clients the brokerage wrote that “Paytm’s key regulatory headwinds - online merchant onboarding ban in 2022 unsecured lending restrictions in 2023 and Paytm Payments Bank (PPBL) ban in 2024 - may be lifting.” “The policy uncertainty appears to be receding for Paytm and there are early signs of market-share recovery for its payments business” the brokerage added further stating “We expect regulatory clarity to allow Paytm to relaunch key products.” On the financial front the brokerage sees a material tailwind on the back of an estimated 20–25% annual revenue growth over the next two to three years. This growth it said would be aided by robust execution cost controls a decline in employee stock-option (ESOP) expenses (following the founder’s decision to forgo grants) and significant traction in high-margin businesses such as merchant lending and device sales. Basis these assumptions Goldman Sachs has also upped its estimates for EBITDA (earnings before interest taxes depreciation and amortisation) by at least 45% for FY26-FY30 which would also imply double-digit upgrades in earnings-per-share estimates. Trading near liftoff Paytm’s turnaround rally looks all the more stark when seen in context. After hitting a multi-year low of around ₹310 a share in May 2024 the stock has since then rallied by over 327% from its lows. Paytm’s recovery has been underpinned by a more focused and streamlined approach to its core business operations. The company has been shedding non-core segments like ticketing rationalising costs and has begun to see a return of investors’ confidence after being burned by regulatory policy reversals. The bounceback also couldn’t have come at a better time for early investors with many of them likely able to recover their initial investments and make handsome profits as well. The stock reportedly finished 15 months in the black in the last 18 months including a near 18% jump in July alone. Hopes and concerns As can be expected with any rallying stock the rerating of Paytm from here has its own caveats. A lot depends on how fast the regulatory tailwinds can come through and how Paytm is able to grow and regain share of its user and merchant base. The company’s execution on its high-margin products and ability to continue cost rationalisation efforts will also need to match up to the expectations. If everything goes as per script Paytm could be all set to make a comeback from being a near dead stock to being a growth story again.