One 97 Communications reported a second-quarter net profit of ₹226 crore, a sharp rise from ₹21 crore in the same period last year. Despite the earnings growth and positive brokerage reports, the stock fell 1.3% in early trade on Tuesday. Investors are weighing the margin expansion against broader market caution.
One 97 Communications, the parent company of Paytm, saw its shares trade 1.3% lower at ₹1,633 on Tuesday morning. This decline occurred despite the company posting strong financial results for the second quarter of the 2027 fiscal year. The stock initially opened with gains, but failed to sustain them in a cautious broader market where indices like the Sensex and Nifty were under pressure.
The company reported a significant jump in profitability, with a net profit of ₹226 crore for the quarter, compared to ₹21 crore in the same period last year. Revenue for the period rose by 28.5% to reach ₹2,648 crore. A key driver of this performance was the expansion in operating margins, which improved to 10.2% from 6.8% previously. EBITDA also saw a strong increase, rising by 91.5% to ₹270 crore.
Financial institutions have maintained an optimistic view on the company's trajectory, with several brokerages keeping "Buy" or "Outperform" ratings. Much of this sentiment is driven by the potential implementation of a merchant discount rate on UPI transactions, which is expected to be introduced after Diwali. Analysts suggest that this regulatory change could improve payment processing margins by approximately 2.5 basis points, potentially boosting EBITDA by up to 40%.
While brokerages have set higher target prices, with some analysts forecasting significant upside, the immediate market reaction remains lukewarm. Investors are likely observing how the company manages operational costs alongside these regulatory shifts. The management has indicated that the financial impact of potential UPI adjustments may take two to three quarters to stabilize, which will be an important metric for shareholders to monitor in the coming months.