Paytm’s parent company, One97 Communications, has posted its first-ever net profit in Q1 FY26. The company made a profit of ₹122.5 crore, compared to a big loss of ₹840 crore in the same quarter last year. This is a huge moment for Paytm, showing that its focus on cost-cutting and improving operations is working.
The company’s total revenue grew by 28% year-on-year to ₹1,917.8 crore. Paytm’s payments business grew 38% over last year, thanks to more merchants using its devices. Its financial services segment, mainly from distributing loans, doubled to ₹529 crore. Paytm also added 13 million payment devices on the ground, helping grow its merchant base and increase non-UPI transactions.
Paytm’s profit was possible mainly because of cost control. Its EBITDA before ESOP (employee stock option) costs was ₹72 crore. Marketing and promotion expenses were cut in half. Cashback costs dropped a lot too, coming down to just ₹37 crore. The company said that using artificial intelligence (AI) helped make its customer service and operations more efficient.
However, even after showing a profit, Paytm’s share price fell nearly 2% to ₹1,031.55 on the NSE after the results were announced. This shows that investors are still being careful. They are happy about the profit, but want to see stable results in the coming quarters.
Analysts said that the results are encouraging but pointed out a few concerns. While more users are joining and transactions are rising, margins could come under pressure. Paytm’s lending business is still not growing fast, and much depends on the overall economy. One major concern is the default-loss guarantee (DLG) model, where Paytm shares the risk of loan defaults with its partners. If more people fail to repay loans, Paytm’s profits could suffer. Also, changing rules in the digital lending and fintech sector add more uncertainty.
Brokerage firms had mixed reactions. Citi maintained a ‘Buy’ rating and raised its target price to ₹1,215, seeing strong growth and better profits ahead. Bernstein also felt confident, calling the profit sustainable. However, Jefferies and Macquarie remained cautious, pointing out risks to margins and loan quality.
In short, Paytm has finally posted a profit and shown that its strategies are working. But for the market to gain full confidence, the company needs to prove it can keep growing steadily, control risks and handle changing regulations better.