Paytm’s Historic Profitability Fails to Impress Investors
Paytm, the parent company of One97 Communications Ltd., has reported its first quarterly net profit since going public in 2021. The fintech firm’s net profit for the April-June quarter of FY26 stood at Rs 122.5 crore, a sharp turnaround from a Rs 540 crore loss in the previous quarter.
This milestone marks a significant achievement for the company, which has been under pressure to demonstrate profitability since its initial public offering (IPO). The company attributed the improved performance to a combination of lower employee stock ownership plan (ESOP) expenses, robust growth in its financial services distribution business, and increased other income.
Operation Performance
Paytm’s operationally, the company posted an Ebitda of Rs 71.5 crore, compared to a loss of Rs 88.6 crore in the preceding quarter. Gross merchandise value (GMV) rose 27% year-on-year to Rs 5.4 trillion, reflecting strong transaction volumes across its platform.
Analyst Reactions
Jefferies upgraded Paytm to a ‘Buy’ rating and raised its target price to Rs 1,250, citing a strong Ebitda beat and improved operating leverage. Citi maintained its ‘Buy’ rating and increased its price target to Rs 1,215, highlighting a ‘significant beat’ on adjusted Ebitda, which came in at Rs 1,000 crore versus its estimate of Rs 400 crore. Bernstein retained its ‘Outperform’ rating with a target price of Rs 1,100, emphasizing that the profit was achieved without any one-off gains.
Market Impact
Shares of One97 Communications Ltd. swung on Wednesday, rising to a high of Rs 1,090 before giving up some gains to trade 0.77% up at Rs 1,059 in early trade. The stock’s volatility was driven by investor optimism following the strong set of earnings.
In conclusion, Paytm’s historic profitability may have failed to impress investors, but the company’s improved performance and strong analyst reactions indicate a positive outlook for the future. As the Indian stock market continues to navigate through uncertain times, investors will be closely watching Paytm’s performance to gauge its potential for growth.
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