Paytm Shares Jump 4% Despite 98% Profit Decline

On Thursday, the Paytm share price jumped around 4.3%, touching a day’s high price of Rs 1,322.60 on NSE after it reported robust Q2FY26 results, achieving a 24% year-on-year rise in operating revenue to Rs 2,061 crore and marking a continued profitable phase for the company. AI-driven efficiencies, strong merchant acquisition, and disciplined cost control anchored this performance. The latest quarter underscores Paytm’s resilience amid regulatory changes and one-off impacts from the gaming segment.

Q2FY26 Financial Performance

Paytm’s operating revenue increased to Rs 2,061 crore, compared to Rs 1,659 crore in Q2FY25. Excluding the entertainment business discontinued last year, the growth was approximately 27% year-on-year. Paytm achieved a positive EBITDA of Rs 142 crore with a margin of 7% against a negative EBITDA of Rs 404 crore a year ago, reflecting improved operational efficiency. Contribution profit grew by 35% to Rs 1,207 crore, with margin expansion to 59%. Initially, the Net profit after tax stood at Rs 211 crores, but the profits were cut down due to exceptional items worth Rs 190 crores, ending up with reporting Rs 21 crores. On a year-on-year basis, it is a 97.7% fall from Rs 930 crores, which includes a one-time exceptional gain related to the entertainment ticketing business. Excluding that item, it would result in a Rs 415 crore loss when compared to the current quarter results, which have improved.

Segment-wise Developments

Payment Services

Payment services remained Paytm’s core growth driver, with segment revenue rising 25% year-on-year to Rs 1,223 crore, and net payment revenue up 28% to Rs 594 crore. Gross Merchandise Value (GMV) processed through Paytm climbed 27% to Rs 5.67 lakh crore. Merchant payments expanded significantly, with active device deployment rising by approximately 25 lakh to 1.37 crore, supported by growth in subscription merchants and widespread offline adoption.

Financial Services and Distribution

Financial service revenues surged 63% year-on-year, reaching Rs 611 crore. The momentum in Merchant Loan and Consumer Loan Distribution and Equity Broking contributed strongly. The company continued to leverage its platform for efficient customer acquisition and engagement in new financial products. A one-time non-cash impairment charge of Rs 190 crore on loans extended to its gaming JV, First Games Technology, affected bottom-line figures this quarter, following the enactment of the Online Gaming Act, 2025.

Management Commentary

Management highlighted the strategic use of AI to improve payment processing efficiency and drive incremental revenue. AI is increasingly viewed both as a revenue multiplier and a cost-control tool for Paytm. The leadership highlighted disciplined expense management, focusing on reducing promotional and marketing costs while sustaining growth in merchant and financial services.

Regulatory and Strategic Moves

Paytm’s investment in PPSL, aligned with RBI direction, positions the company for sustained compliance and future expansion both in digital and offline payments. The company’s adaptability to the gaming ban and reallocation of resources demonstrates strategic agility in a fast-evolving fintech landscape.

The board approved an additional Rs 2,250 crore investment in Paytm Payments Services Ltd (PPSL) via a rights issue to support regulatory requirements as per RBI’s September 2025 guidelines. This move underpins Paytm’s commitment to regulatory compliance and strengthens its offline-to-online payments leadership.