Paytm profit jumps to Rs 225 crore as revenue rises 28 per cent

MUMBAI: Paytm has found more change in its pocket, with the payments company reporting a sharp rise in quarterly profit as revenue grew and it prepared to invest further in its technology and international payments businesses.

One 97 Communications, the parent company of Paytm, reported consolidated profit after tax of Rs 225 crore for the quarter ended 30 September 2026, compared with Rs 21 crore in the corresponding quarter last year. Revenue from operations rose to Rs 2,648 crore from Rs 2,061 crore, an increase of around 28.5 per cent.

The company’s consolidated financial results for the second quarter of FY27, approved by its board on 26 October, also showed an improvement in profitability before exceptional items. Profit before exceptional items and tax increased to Rs 296 crore from Rs 220 crore a year earlier. Profit before tax stood at Rs 292 crore, against Rs 30 crore in the year-ago quarter.

Total income, including other income of Rs 182 crore, climbed to Rs 2,830 crore from Rs 2,283 crore. Total expenses rose to Rs 2,531 crore from Rs 2,062 crore, reflecting higher spending across several operating heads.

Payment processing charges increased to Rs 805 crore from Rs 629 crore, while marketing and promotional expenses rose to Rs 194 crore from Rs 122 crore. Employee benefits expense moved up to Rs 759 crore from Rs 663 crore, and software, cloud and data centre expenses increased to Rs 211 crore from Rs 133 crore. Depreciation and amortisation expenses stood at Rs 146 crore, compared with Rs 137 crore, while other expenses rose to Rs 409 crore from Rs 373 crore.

The quarter’s consolidated results included an exceptional charge of Rs 4 crore for writing off obsolete capital work-in-progress. The company reported a total tax expense of Rs 67 crore, comprising Rs 32 crore in current tax and Rs 33 crore in deferred tax expense.

The six-month performance also showed a marked improvement. For the half year ended 30 September 2026, consolidated revenue from operations rose to Rs 5,096 crore from Rs 3,979 crore in the corresponding period last year. Total income increased to Rs 5,460 crore from Rs 4,442 crore.

Profit after tax for the six-month period climbed to Rs 445 crore from Rs 144 crore, while profit before exceptional items and tax rose to Rs 543 crore from Rs 363 crore. Profit before tax reached Rs 539 crore, compared with Rs 156 crore a year earlier.

Total expenses for the half year increased to Rs 4,914 crore from Rs 4,078 crore. Payment processing charges stood at Rs 1,599 crore, against Rs 1,210 crore, while marketing and promotional expenses rose to Rs 363 crore from Rs 222 crore. Employee benefits expense increased to Rs 1,501 crore from Rs 1,305 crore, and software, cloud and data centre expenses rose to Rs 370 crore from Rs 301 crore.

The company’s earnings per share for the quarter stood at Rs 3.52 on a basic basis and Rs 3.47 on a diluted basis. For the half year, basic earnings per share was Rs 6.97 and diluted earnings per share was Rs 6.89.

Alongside its results, Paytm approved additional investments of up to Rs 500 crore in its wholly owned subsidiary, Paytm Cloud Technologies Ltd (PCTL), in one or more tranches over the next 12 months. PCTL’s board also approved an investment of up to Rs 500 crore in Paytm Singapore Pte Ltd over the same period.

The proposed investments are intended to meet working capital requirements, fund investments and support business expansion. The company’s investment in PCTL may be made through instruments including equity shares and optionally convertible redeemable preference shares, at fair market value. The investment in Paytm Singapore is proposed through equity shares at fair market value, in an equivalent foreign currency.

PCTL reported turnover of Rs 84.73 crore in FY26, compared with Rs 12.44 crore in FY25 and Rs 12.53 crore in FY24. Paytm Singapore, incorporated in June 2025, reported no turnover in FY26. It operates in payments and financial services, excluding banking and insurance, as well as information technology support services, and has a presence in Singapore.

Both entities will remain wholly owned subsidiaries within the Paytm group following the proposed investments. The company said the transactions would be conducted on an arm’s-length basis.

Paytm also flagged a potential improvement in its payments processing margin following an update on the National Payments Corporation of India’s merchant discount rate (MDR) framework.

According to the company’s disclosure, an NPCI press release dated 13 October 2026 stated that MDR would be implemented immediately after Diwali, on a date to be notified separately.

Paytm said the potential benefit would be reflected in its payments processing margin, which it defines as MDR revenue earned on payments gross merchandise value (GMV), net of payment processing charges. The company said this margin had been expanding structurally and was currently comfortably above four basis points.

Based on a proposed MDR cap of 0.4 per cent on select payments involving non-industry merchants for transactions above Rs 2,000, and its current GMV mix, Paytm expects an indicative uplift of approximately 2.5 basis points in its overall payments processing margin.

The company cautioned that the actual outcome may take time to settle, with the margin impact expected to stabilise over two to three quarters after implementation. It said further updates could be provided in future earnings releases as visibility improves.

The board also approved default loss guarantees (DLGs) on loans distributed through lending partners, in line with Paytm’s existing loan distribution business model. The company earns sourcing fees and/or collection fees on loans facilitated through these partnerships.

The approved limits include revised DLGs of up to Rs 150 crore each for Piramal Finance and Kisetsu Saison Finance (India), increased from the previously approved limits of up to Rs 90 crore each. New DLGs of up to Rs 100 crore each were approved for Vivriti Capital and UGRO Capital.

These sit alongside previously disclosed DLGs of up to Rs 350 crore for SMFG India Credit and up to Rs 90 crore for Muthoot Fincorp. The guarantees will be provided through fixed deposits or bank guarantees, with the company disclosing that the financial guarantee expense would apply to the amounts outlined.

The latest approvals expand Paytm’s set of lending partnerships while placing defined limits on its guarantee exposure. The filing does not specify the amount of loans that will ultimately be disbursed under these arrangements.

The results filing also detailed ongoing regulatory matters. Paytm, Little Internet and Nearbuy India received a show-cause notice from the Directorate of Enforcement in February 2025 alleging contraventions of certain provisions of the Foreign Exchange Management Act. The notice cited alleged contraventions with an aggregate value of approximately Rs 611 crore.

Paytm said the Reserve Bank of India had compounded matters valued at approximately Rs 21 crore relating to Nearbuy India and Rs 33 crore relating to the company during FY26. The RBI had also observed that matters valued at approximately Rs 485 crore were in compliance with applicable laws following applications and additional steps taken by the company and its subsidiaries.

The group said it was taking steps to resolve the remaining matters and had made provisions for related compounding fees based on an independent legal opinion and management assessment. It added that the consequences of the unresolved matters could not yet be assessed pending the final outcome of the related processes.

The filing separately addressed the regulatory position of Paytm Payments Bank. The RBI cancelled the bank’s licence on 24 April 2026, after which its shareholders approved resolutions to enable winding-up, subject to the regulator’s directions or permission. Paytm said it had no exposure to the bank and maintained no material business arrangements or service partnerships with it, adding that the development had no direct financial or operational impact on the group.

Another disclosure concerned First Games Technology, Paytm’s joint venture, which had received a GST show-cause notice proposing a liability of Rs 5,712 crore plus penalties for the period from April 2018 to March 2023. Following the Supreme Court’s decision upholding the 28 per cent GST levy on online gaming companies, the joint venture received a demand order on 12 October 2026 reducing the tax liability to Rs 704 crore, along with an equal penalty and applicable interest. The joint venture is evaluating its next steps. Paytm said its exposure was limited to its investment in the venture, whose carrying value was already nil, and that no financial impact or adjustment to its results was required.

Paytm’s latest results therefore combine stronger reported profitability with fresh investment plans and a potential margin tailwind from MDR implementation. The scale of the eventual benefit from the revised merchant payments framework, however, will become clearer only after the new rules take effect and the impact stabilises over the coming quarters.