Turnaround Stock in Focus: Vijay Shekhar Sharma-Founded Paytm Reports First Full Year of Profit in FY26; FY27 Revenue Growth Expected to be Higher

One 97 Communications Limited, the parent company of Paytm, reported a strong turnaround in FY26, marking its first full year of profit. The performance was supported by higher operating revenue, expansion in payment processing margins, growth in financial services distribution and disciplined cost control.

For FY26, Paytm’s revenue from operations stood at Rs 8,437 crore, up 22 per cent from Rs 6,900 crore in FY25. The company reported EBITDA of Rs 502 crore compared with an EBITDA loss of Rs 1,506 crore in the previous year, marking an improvement of Rs 2,008 crore. Profit after Tax stood at Rs 552 crore as against a loss of Rs 663 crore in FY25, reflecting an improvement of Rs 1,215 crore. Excluding one-time items in both years, the improvement stood at Rs 2,228 crore.

Q4FY26 Performance: Revenue Growth Continues

In Q4FY26, Paytm reported operating revenue of Rs 2,264 crore, up 18 per cent from Rs 1,911 crore in Q4FY25. On a sequential basis, revenue increased 3 per cent from Rs 2,194 crore in Q3FY26.

The company also shared comparable numbers, excluding PIDF and UPI incentives, to reflect the underlying business performance. On this basis, Q4FY26 operating revenue stood at Rs 2,254 crore, up 26 per cent YoY and 7 per cent QoQ.

Paytm stated that reported numbers were affected by the discontinuation of the PIDF scheme, while the FY26 UPI incentive is yet to be finalised. Despite this, the company achieved its guidance of offsetting 30 to 40 per cent of the PIDF impact in Q4FY26. Management added that it will continue to target further offset over time through higher revenues and focused sales efforts, while maintaining discipline on return on investment and payback.

Profitability Improves in Q4FY26

Contribution profit for Q4FY26 stood at Rs 1,254 crore, up 17 per cent from Rs 1,071 crore in Q4FY25. On a comparable basis, contribution profit rose 31 per cent YoY to Rs 1,244 crore. The comparable contribution margin improved to 55 per cent from 53 per cent a year ago.

EBITDA came in at Rs 132 crore in Q4FY26 compared with an EBITDA loss of Rs 88 crore in Q4FY25, showing a year-on-year improvement of Rs 220 crore. On a comparable basis, EBITDA improved by Rs 330 crore YoY to Rs 122 crore. Sequentially, reported EBITDA declined 15 per cent from Rs 156 crore in Q3FY26, while comparable EBITDA rose 79 per cent from Rs 68 crore.

PAT Turns Positive

Paytm reported a profit after tax of Rs 183 crore in Q4FY26 compared with a loss of Rs 545 crore in Q4FY25. On a sequential basis, PAT declined from Rs 225 crore in Q3FY26. Profit before exceptional items stood at Rs 162 crore as against a loss of Rs 21 crore in the same quarter last year.

For FY26, PAT stood at Rs 552 crore compared with a loss of Rs 663 crore in FY25. The company stated that FY25 PAT included a one-time gain of Rs 1,345 crore from the sale of the entertainment business and a one-time charge of Rs 522 crore towards acceleration of ESOP expense and other impairments. FY26 PAT included a one-time charge for full impairment of Rs 190 crore loan to its joint venture, First Games Technology Pvt. Ltd.

Segment-Wise Performance

Payment Services revenue for Q4FY26 increased 21 per cent YoY to Rs 1,265 crore from Rs 1,046 crore. On a sequential basis, it rose 6 per cent from Rs 1,192 crore. For FY26, Payment Services revenue stood at Rs 4,646 crore, up 20 per cent from Rs 3,879 crore in FY25.

Distribution of Financial Services remained the fastest-growing segment. Revenue from this business rose 38 per cent YoY to Rs 750 crore in Q4FY26 from Rs 545 crore. Sequentially, it increased 12 per cent from Rs 672 crore. For FY26, the segment reported revenue of Rs 2,594 crore, up 52 per cent from Rs 1,703 crore in FY25.

Marketing Services revenue declined 10 per cent YoY to Rs 239 crore in Q4FY26. For the full year, it declined 18 per cent to Rs 952 crore from Rs 1,158 crore in FY25. Other operating revenue stood at Rs 10 crore in Q4FY26 compared with Rs 52 crore in Q4FY25.

Merchant Payments Remain a Key Growth Driver

Paytm’s merchant GMV stood at Rs 6.5 lakh crore in Q4FY26, up 27 per cent YoY. The company said merchant GMV growth accelerated from 24 per cent YoY in Q3FY26 to 27 per cent YoY in Q4FY26, supported by investments in products, distribution and service.

Merchant subscriptions, including devices, reached 1.51 crore, with the company adding 27 lakh net devices on a YoY basis. Net payment revenue stood at Rs 583 crore in Q4FY26, up 25 per cent YoY on a comparable basis.

Payment processing margin expanded to above 4 basis points from previous guidance of >3 bps a year ago, driven by pricing discipline and higher growth of profitable MDR bearing instruments including credit cards on UPI and affordability offerings such as EMI. 

Financial Services Distribution Scales Further

Paytm’s financial services distribution business reported Q4FY26 revenue of Rs 750 crore, up 38 per cent YoY. Key financial services customers stood at 7.5 lakh, rising by 2 lakh YoY, or 36 per cent.

The company said merchant loans continue to see growth from both new and repeat borrowers, with repeat borrowers contributing more than 50 per cent of merchant loan disbursements. Paytm also stated that loans are underwritten and booked by lending partners on their balance sheets, while Paytm acts as a distribution and collection partner.

Consumer Franchise Gains Market Share

Paytm’s customer UPI GTV stood at Rs 5.5 lakh crore in Q4FY26, up 46 per cent YoY. The company said this growth was 2.2 times the industry UPI growth of 21 per cent. Monthly Transacting Users stood at 7.7 crore, up 50 lakh YoY.

The company said investments in product-led innovation are helping improve consumer retention and monetisation. It also highlighted momentum in Paytm Postpaid, personal loan distribution, equity broking, Margin Trade Funding, Mutual Fund SIPs and digital gold.

Cost Control Supports Operating Leverage

Paytm’s total indirect expenses declined 3 per cent YoY to Rs 1,122 crore in Q4FY26 from Rs 1,160 crore. Marketing cost declined 36 per cent YoY to Rs 65 crore, while employee cost, including ESOP costs, declined 1 per cent YoY to Rs 739 crore. Software, cloud and data centre expenses rose 20 per cent YoY to Rs 175 crore.

For FY26, indirect expenses declined 16 per cent to Rs 4,358 crore from Rs 5,184 crore in FY25. Marketing costs fell 46 per cent to Rs 275 crore, while employee cost declined 16 per cent to Rs 2,765 crore.

The company said it expects indirect expenses to grow significantly slower than revenue going forward, which should support operating leverage. ESOP cost for FY26 stood at Rs 174 crore, below the guided range of Rs 250 crore to Rs 275 crore, mainly due to ESOP lapses upon attrition.

Balance Sheet and Cash Position

Paytm’s cash balance stood at Rs 13,315 crore as of March 2026 compared with Rs 12,809 crore as of March 2025, an increase of Rs 506 crore. The company said this balance does not include Paytm Money customer funds and balances in escrow or nodal accounts, but includes the pre-funded balance in escrow account from PPSL after the transfer of the offline business.

Other income declined in Q4FY26, as guided earlier, due to reinvestment of maturing investments at lower yields after repo rate cuts. Paytm also reported a positive Rs 255 crore translation impact on USD assets in FY26, reflected in reserves.

Key Developments

Paytm said it has moved to conservative revenue recognition and discontinued the use of adjusted metrics. The company stated that all disclosures are now made on a GAAP basis or as per standard definitions.

The company also said there was nearly nil revenue impact from the industry stoppage of rent payments through credit cards and the Real Money Gaming Act, driven by proactive compliance.

On the international front, Paytm Cloud Technologies Limited and its wholly owned subsidiary Paytm Singapore Pte. Ltd. incorporated a new wholly owned step-down subsidiary in Indonesia, PT Paytm Indonesia Teknologi, on April 10, 2026. The company has invested a total of IDR 15 billion, or approximately Rs 8 crore, in this entity.

FY27 Outlook

Revenue growth in FY27 expected to be higher than the 22 per cent delivered in FY 2026 and indirect expenses will grow meaningfully slower than revenue. Operating leverage is therefore mathematically embedded. The four levers in the outlook compound.

Disclaimer: The article is for informational purposes only and not investment advice.