Global investment banking firm Nomura has initiated coverage on three stocks with buy ratings and upside potential of up to 32%, highlighting growth drivers across merchant lending, EV adoption, and telecom tariff hikes. The firm's latest recommendations include Paytm with a target price of ₹2,250 above its IPO price of ₹2,150 (32% upside potential), Dhoot Transmission at ₹1,800 (22.7% upside), and Bharti Hexacom at ₹1,870 (19.1% upside). As per CNBC TV18, Nomura has positioned these stocks as beneficiaries of structural trends including merchant lending growth, EV adoption, and telecom tariff hikes, with the highest upside potential coming from Paytm's structural rebound potential.
Nomura initiated coverage on Paytm with a buy rating and ₹2,250 target price, representing 32% upside from current levels. The investment bank highlighted Paytm's transformation from a regulatory shock victim to a structural rebound story, with payments and merchant lending expected to drive revenue growth. According to The Economic Times, Paytm is riding India's digital payments highway with robust growth levers in the coming quarters. Paytm's EBITDA is projected to grow at a 96% CAGR over FY26-29, with the company building a leaner, indirect cost base supported by AI, scale, and disciplined marketing. The UPI merchant discount rate (MDR), international expansion, and AI offer additional growth opportunities, with Nomura valuing the stock at 26 times enterprise value to EBITDA. However, key risks include deterioration in lending asset quality and intensifying competition, as noted by the brokerage.
Paytm's core payments business provides a recurring revenue stream, supported by India's expanding digital payments infrastructure. As per The Economic Times, Paytm's gross merchandise value (GMV) is expected to grow at a CAGR of 25% over FY25-29F, with rising credit penetration through credit cards, RuPay credit cards on UPI and credit lines on UPI expected to lift the net payment margin from 4.03 basis points in FY26 to 5.26 basis points by FY29F. Paytm's merchant lending penetration currently stands at just 8% of its 15.7 million subscription merchant base, with Nomura estimating this could increase to 11% by FY29F. The company's payment processing revenue is projected to grow at 25% CAGR over FY26-29F, complemented by significant growth potential in merchant lending expansion. Additional growth opportunities include the proposed UPI MDR framework, where a 0.4% MDR will apply to person-to-merchant transactions exceeding ₹2,000, with charges capped at ₹300 for transactions of ₹75,000 or more.
India's fintech market is positioned for explosive growth, with revenue expected to reach $109 billion by 2031 from $51 billion in 2026, according to Nomura citing data from Mordor Intelligence India. Digital payments are set to expand around three-fold, reaching approximately $10.2 trillion by FY30, as reported by the brokerage citing data from the Indian payments handbook – 2025-2030. Nomura emphasized that companies with meaningful scale, entrenched consumer relationships, AI-led technology capabilities, and strategic partnerships are best positioned to capture this growth phase. Paytm sits at the centre of this expansion story, operating under One97 Communications with its dominant position in merchant lending and AI-driven efficiency improvements.
Nomura initiated a buy rating on Dhoot Transmission with a target price of ₹1,800, indicating 22.7% upside potential from previous close. The firm highlighted the company's strong positioning to benefit from EV adoption, premiumisation, and localisation trends. As per CNBC TV18, Dhoot Transmission holds 41% share of the two-wheeler and three-wheeler wiring harness industry in FY26, with 77% of revenue from this segment and commanding 70-80% wallet share in popular two-wheeler EV models. The brokerage expects EV revenue contribution to rise from 24% in FY26 to 48% in FY29, with revenue and earnings per share growing at 27% and 28% CAGR respectively over FY26-29. The company's EBITDA margin is expected to remain stable in the 15.2-15.7% range. India's electric two-wheeler penetration could rise from 6.6% in FY26 to 27% by FY31, while passenger vehicle EV penetration could rise to 14% over the same period, according to Nomura. Dhoot shares rose as high as 3.55% after the Nomura coverage initiation, with the stock trading 0.5% higher at ₹1,479.20 on the NSE, compared to a 1.46% advance in the benchmark Nifty index. The stock has zoomed nearly 70% year-to-date.
Nomura initiated a buy recommendation on Bharti Hexacom with a target price of ₹1,870, indicating 19.1% upside potential from previous close. The investment bank noted that the de-rating in the stock appears overdone and expects tariff hikes to revive sentiment. According to CNBC TV18, Bharti Hexacom is positioned as among the most levered to likely tariff hikes, with pure-play wireless mobility operations justifying premium valuations. The brokerage highlighted that the premium operator is under-penetrated in Rajasthan and Northeast India markets, with superior return on capital employed (RoCE) and potential for progressively higher shareholder returns. Of 16 analysts covering the stock, 13 have buy recommendations while two have hold ratings and one has a sell rating.
