One 97 Communications Ltd, which operates the Paytm platform, on Monday (October 26) reported a net profit of ₹226 crore in the second quarter of FY27, compared with ₹21 crore in the year-ago period.
The Q2 FY26 profit was hit by a ₹190 crore joint venture (JV) loan impairment. Revenue from operations rose 28.5% year-on-year to ₹2,648 crore from ₹2,061 crore.
Earnings before interest, taxes, depreciation and amortisation (EBITDA), on a group basis, increased 91.5% to ₹270 crore from ₹141 crore. The EBITDA margin improved to 10.2% in the quarter from 6.8% in the corresponding period last year.
Paytm’s Merchant GMV Rises
Paytm’s merchant gross merchandise value (GMV) rose 26% year-on-year to ₹7.1 lakh crore in the September quarter, while its payment processing margin remained above 4 basis points (bps).
The company added 27 lakh merchant subscriptions year-on-year, taking the total number of subscription-paying merchants to 1.64 crore. Net payment revenue, excluding incentives under the Payments Infrastructure Development Fund (PIDF), increased 21% year-on-year on a comparable basis and 8% on a reported basis.
Paytm recorded its sixth consecutive quarter of consumer payments market share gains. Monthly transacting users increased by 1 crore year-on-year to 8.5 crore, the highest level in around three years.
The company’s Unified Payments Interface (UPI) gross transaction value (GTV) grew 42%, compared with industry growth of 19%, or 2.2 times the industry growth rate, according to data from the National Payments Corporation of India (NPCI).
Paytm’s Contribution Margin at 56%
Paytm said its contribution margin was 56% in the September quarter of FY27, compared with 57% a year earlier, after adjusting for PIDF incentives. The contribution margin of 59% in the year-ago quarter had been temporarily elevated by PIDF incentives and a lower share of loan distribution under the Default Loss Guarantee (DLG) model.
The company said contribution margin could vary due to changes in the DLG mix, segment mix and the share of card processing. It focuses on monetisation across the customer lifecycle, as reflected in EBITDA, EBITDA margin and profit after tax (PAT).
For the December quarter of FY27, Paytm expects its contribution margin to decline due to materially higher DLG costs and seasonal factors, including a higher share of card processing during the festive season. However, the company expects EBITDA to continue to improve.
Paytm’s Device-Related Capital Expenditure at ₹400 Crore
Capital expenditure based on device intake stood at approximately ₹400 crore in the first half of FY27. Paytm attributed the increase from the previous year to fewer refurbished devices, which raised spending on new devices but reduced refurbishment costs. The company also deployed upgraded devices to existing merchants to improve engagement and retention while maintaining payback periods.
Paytm’s Tax Expense Rises
The company’s income tax expense increased to ₹67 crore in the September quarter of FY27 from ₹27 crore in the June quarter, primarily due to an additional deferred tax impact of ₹34 crore after completing the group’s assessment of tax on interest income at one of its subsidiaries.
Excluding this impact, tax expense stood at ₹33 crore, broadly in line with the previous quarter. Of the additional ₹34 crore tax impact, ₹6 crore related to the September quarter and may continue in future quarters.
Going forward, Paytm expects tax expense to arise primarily from other income, mainly interest income, partially offset by the remaining unabsorbed depreciation during the year.
Paytm Approves Investments of Up to ₹1,000 Crore in subsidiaries
One 97 Communications Ltd has approved additional investments of up to ₹500 crore in its wholly owned subsidiary Paytm Cloud Technologies Ltd (PCTL) over the next 12 months, in one or more tranches.
Separately, PCTL’s board has approved an investment of up to ₹500 crore in its wholly owned subsidiary, Paytm Singapore Pte. Ltd., over the same period. The investments are intended to meet future working capital requirements, fund investments and support business expansion at both subsidiaries.
Paytm Expects 2.5 Bps Increase in Payment Processing Margin
On the payments business, the company said the National Payments Corporation of India (NPCI), in a press release dated October 13, 2026, stated that the merchant discount rate (MDR) would be implemented immediately after Diwali, with the exact date to be notified separately.
Paytm said the potential benefit from MDR would be reflected in its payments processing margin (PPM), which is calculated as MDR revenue earned on payments GMV less payment processing charges. The margin has been expanding structurally and is currently comfortably above 4 basis points (bps).
Based on the proposed MDR cap of 0.4% on select payments by non-industry merchants for transactions above ₹2,000, and its current GMV mix, the company expects an indicative increase of around 2.5 bps in overall PPM.
Paytm expects the actual outcome to stabilise within two to three quarters after implementation and said it may provide further updates in future earnings releases as visibility improves.
Shares of One 97 Communications Ltd ended at ₹1,654.70, up by ₹38.60, or 2.39%, on the BSE.