Paytm’s parent One 97 Communications reported a consolidated net profit of ₹225 crore for the September 2026 quarter (Q2 FY27), up from ₹21 crore a year earlier. Operating revenue rose 28% year-on-year to ₹2,648 crore, according to the company’s earnings release on 26 October. EBITDA nearly doubled, rising 90% to ₹270 crore, and the EBITDA margin widened to 10% from 7%.
Sequentially, revenue grew 8% and profit edged up from ₹220 crore in Q1 FY27. Paytm said its year-on-year growth would look even stronger without the Payments Infrastructure Development Fund (PIDF) incentive, which was discontinued at the end of December 2025. Excluding PIDF, revenue grew 33% and EBITDA nearly quadrupled to ₹258 crore.
Financial services distribution leads growth
Revenue from distributing financial services, mainly merchant and consumer loans, equity broking and wealth products, rose 49% to ₹912 crore. Payment services revenue rose 25% to ₹1,434 crore, and marketing services revenue grew 26% to ₹287 crore. The number of key financial services customers increased 35% to 8.8 lakh.
The company described its lending business as capital-light, since loans are underwritten and held by partner lenders. Over half of merchant loan disbursements now go to repeat borrowers. Paytm Postpaid, its credit line on UPI, has completed a year since relaunch, and the company expects it to make a meaningful contribution to revenue and EBITDA from FY28.
Paytm cautioned that default loss guarantee (DLG) costs will “increase materially” from Q3 FY27, because it has resumed DLG arrangements with its largest lending partner. It said these arrangements remain well below the permitted 5% limit. Because DLG costs are booked upfront while the related revenue comes in over the life of the loan, the company expects contribution margin to dip in Q3 but EBITDA to keep improving.
Payments scale and the UPI MDR upside
Merchant GMV rose 26% to ₹7.1 lakh crore. The number of subscription merchants, including Soundbox and card-machine users, reached 1.64 crore, and average monthly transacting users rose by 1 crore year-on-year to 8.5 crore. Citing NPCI data, the company said its consumer UPI payment value grew 42%, compared with 19% for the industry. It described this as its sixth straight quarter of consumer payments market-share gains.
Paytm also gave its first estimate of the impact of the merchant discount rate (MDR) that NPCI plans to introduce on select person-to-merchant UPI payments after Diwali. Based on the proposed 0.4% cap on payments above ₹2,000 for non-exempt merchants and its current GMV mix, the company expects an indicative uplift of about 2.5 basis points in its payment processing margin, which is currently above 4 bps. It said the actual effect may take two to three quarters after implementation to stabilise. “UPI MDR will be a revenue and profit upside to our business, not the core foundation of our business,” the company said.
AI-led operating leverage
Indirect expenses rose 14% to ₹1,209 crore, falling to 46% of revenue from 52% a year earlier. Paytm credited this to AI-driven productivity gains across sales, service, risk, collections and engineering. Software, cloud and data-centre costs rose 59% to ₹211 crore, which the company attributed to higher AI usage and a tech-platform consolidation it expects to continue for one more quarter. Paytm said it has also started offering its in-house AI platform to enterprise merchants.
Paytm’s cash balance stood at ₹13,617 crore. According to the company’s regulatory filing summarised by InvestyWise, the board approved investing up to ₹500 crore in its wholly owned subsidiary Paytm Cloud Technologies. Paytm Cloud Technologies, in turn, will invest up to ₹500 crore in Paytm Singapore to fund working capital and expansion over the next 12 months.
Why it matters
Paytm’s profit has now come largely from its operations for a few quarters, and lending distribution is growing faster than payments. This suggests that India’s largest listed payments company is shifting from earning on transactions to earning on credit and financial services, a shift fintechs across the industry are attempting. The UPI MDR estimate also gives the market its first company-specific figure for how much the long-debated merchant fee could add to payment margins.
