One97 Communications, the parent company of Paytm, reported a net profit of ₹123 crore for the quarter ending June 2025. This milestone marks the company’s first-ever quarterly profit across all major financial metrics—a significant achievement after years of effort to validate its fintech business model. The numbers signal a turning point in Paytm’s financial journey.
Paytm also reported a positive EBITDA of ₹72 crore in Q1, indicating a shift in its core operating structure. However, despite the impressive results, the stock declined by 1.60% to ₹1,034.20 in early BSE trade. The slip is likely due to profit-booking, as the stock had rallied in previous weeks.
Brokerage firm JM Financial has maintained its bullish stance on Paytm, reiterating a ‘Buy’ rating and setting a target price of ₹1,320 by June 2026. Analyst Sachin Dixit highlighted that revenue grew to ₹1,920 crore in Q1 FY26—a 4% increase from the previous quarter—while the contribution margin expanded to 60%, up 560 basis points sequentially.
According to JM Financial, the simultaneous achievement of EBITDA and PAT profitability showcases growing business maturity. The firm projects a sharp rise in profitability over the next two years, estimating a net profit of ₹1,450 crore by FY27.
Paytm’s contribution profit rose 52% year-on-year to ₹1,151 crore, while contribution margin increased by 10 percentage points to 60%. These numbers indicate a healthier business mix and improved operating leverage. Notably, the management has revised its contribution margin guidance upward to the mid-to-high 50s, strengthening investor confidence.
The company attributes its turnaround to AI-led efficiencies, increased focus on financial services, and tighter cost controls—all of which helped optimize operations.
Total revenue from operations grew 28% year-on-year to ₹1,918 crore. The growth was fueled by several factors:
A growing base of subscription-paying merchants
Higher margins in payment processing
Surging income from financial services and lending
Net payment revenue grew 38% to ₹529 crore, driven by increased adoption of device-based payment solutions. Meanwhile, financial services revenue doubled to ₹561 crore, supported by merchant loan disbursements, better collections, and income from the Default Loss Guarantee (DLG) model.
Paytm now boasts a merchant base of 1.3 crore. The company says it has improved the productivity of its sales teams while bringing down hardware costs. This helped it reduce capital expenditure even as it scaled its merchant network. The fintech firm ended the quarter with a strong cash position of ₹12,872 crore, providing a solid foundation for future investment in AI and financial products.
Management remains optimistic about growth opportunities, particularly in India’s under-penetrated digital payments space. With over 10 crore merchants expected to adopt digital payments in the coming years, Paytm sees significant upside in subscription-based services. It believes that 40–50% of these merchants may opt for recurring payment models.
However, challenges persist. The digital payments space remains intensely competitive, with zero-MDR UPI policies limiting monetization. Additionally, RBI regulations and evolving consumer behaviors may impact future earnings momentum.
Conclusion: Promising Signs but Caution Warranted
Paytm’s first quarterly profit across all key financial metrics is undoubtedly a positive sign for the company and its investors. With strong growth in high-margin services, improved cost control, and a growing merchant base, the fintech player appears poised for sustainable growth.
However, the competitive and regulatory environment remains uncertain. While brokerages remain bullish, investors may want to assess long-term profitability trends and Paytm’s ability to navigate market risks before making investment decisions.