Paytm Posts 225 Crore Rupee Profit as Revenue Grows 28% in Q2

Key Facts

One 97 Communications, the parent company operating the Paytm brand, reported a profit after tax of 225 crore rupees for the quarter ended September 30, 2026, compared with 21 crore a year earlier. Operating revenue was 2,648 crore rupees, up 28% year on year, while earnings before interest, tax, depreciation and amortization rose 90% to 270 crore. The company said operating profit growth reflected business expansion and improved operating leverage. On a comparable basis, excluding the Payments Infrastructure Development Fund incentive, revenue and operating profit grew faster. Revenue on this basis was 2,636 crore rupees, up 33%, while operating profit rose 279% to 258 crore.

The differing growth rates reflect how the government incentive was accounted for in the year-earlier results; Paytm excluded the Payments Infrastructure Development Fund incentive from its comparable figures after disbursements ended in December 2025. On this basis, operating margin widened to 10% from 3% a year earlier. On a reported basis, margin was 10%, compared with 7% in the year-earlier quarter. The company said operating margin expanded 331 basis points year on year and 190 basis points from the previous quarter. The reported and comparable figures offer two different views of performance, with higher growth on the basis that excludes the incentive.

In its core business, merchant transaction value rose 26% year on year to 7.1 lakh crore rupees, while net payments revenue was 644 crore, up 21% on a comparable basis. Payments services revenue increased 25% to 1,434 crore rupees, while financial services distribution revenue rose 49% to 912 crore. Paytm's transaction value through the UPI system grew 42% during the quarter, compared with industry growth of 19%. The company said it gained share in consumer payments for the sixth consecutive quarter. These indicators show expanding activity across payments and financial services, with platform transactions growing faster than the industry.

Monthly active users totaled 8.5 crore, up 1 crore year on year, the largest addition in about 3 years. The number of merchants paying subscriptions reached 1.64 crore, after an annual increase of 27 lakh. In financial services, the number of major customers rose 35% to 8.8 lakh. Paytm said indirect expenses declined to 46% of revenue from 52% a year earlier, attributing the decrease to AI-driven efficiencies. By contrast, software, cloud and data center costs rose 59% to 211 crore rupees. The company expects technology platform consolidation costs to continue for one more quarter, alongside continued investment in AI.

Paytm's cash balance was 13,617 crore rupees in September 2026. On lending, the company said costs for guaranteeing default losses have risen since the first quarter of fiscal 2026 and will increase materially from the third quarter of fiscal 2027, after guarantees resume with its largest lending partners. This outlook puts loan guarantee costs among the expense items set to change next quarter. Meanwhile, the company presented a proposed fee on some eligible UPI transactions, capped at 0.4% for payments above 2,000 rupees. It said its current payment processing margin exceeds 4 basis points and that implementation could add about 2.5 basis points to gross margin, with the actual impact expected to stabilize within 2 to 3 quarters of implementation.

Paytm said MDR charges on UPI transactions will begin immediately after Diwali, with the specific implementation date to be announced later. The company expects the actual impact to stabilize within 2 to 3 quarters of launch and estimated an indicative improvement of about 2.5 basis points in payment processing margin. It also said revenue growth and continued improvement in operating leverage, supported by AI, underpin its expectation of sustained revenue growth and margin expansion over the long term. One 97 Communications shares closed at 1,654.70 rupees on October 26, up 2.39% in the session, while the Nifty 50 rose 0.68%. The earnings call was scheduled for October 27, 2026.