Paytm's Astonishing Profit Jump: ₹211 Cr PAT Fueled by AI & Strict Costs!

Tech

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Updated on 13 Nov 2025, 01:16 pm

One97 Communications Limited, the parent entity of digital payments firm Paytm, has marked a significant turnaround by reporting its second consecutive profitable quarter. For the quarter ending September 2025 (Q2 FY26), Paytm announced a Profit After Tax (PAT) of ₹211 crore, a substantial 71% increase from the previous quarter's ₹123 crore. This strong performance was achieved despite a one-time charge of ₹190 crore for the full impairment of a loan to its joint venture, First Games Technology Pvt. Ltd. The company's ability to record a positive PAT of ₹21 crore even after this write-off underscores its operational resilience and adherence to regulatory compliance.

Operating revenue saw a robust 24% year-on-year growth, reaching ₹2,061 crore. Profitability metrics also showed a clear positive shift, with Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) standing at ₹142 crore, representing a 7% margin. This is a significant improvement from the loss reported in the corresponding period of the previous year.

The company attributes its success to a disciplined cost management strategy, a focus on fundamental business growth, and early adoption of Artificial Intelligence (AI). Net payment revenue increased by 28% year-on-year to ₹594 crore, supported by an increase in subscription merchants and improved payment processing margins. Revenue from financial services distribution jumped 63% year-on-year to ₹611 crore, driven primarily by merchant loan distribution as small businesses on Paytm's network accessed credit through its lending partners.

Paytm is enhancing merchant monetization by growing its installed base of devices like QR codes, Soundboxes, and card machines, reaching 1.37 crore subscription merchants. AI is being leveraged to deepen engagement with merchants and consumers, introducing new features and an AI-led 'business assistant' approach. Indirect expenses, including Employee Stock Ownership Plans (ESOPs), decreased by 18% year-on-year, with marketing costs for consumer acquisition reduced by 42% as the company strategically focused spending on areas with better retention and monetization.

The balance sheet remains strong, with Paytm holding a cash balance of ₹13,068 crore (excluding customer and escrow balances), providing ample flexibility for growth investments. The company is also planning to explore international market opportunities for its payment and financial-services technology.

Impact This news signifies a strong operational recovery and strategic execution by Paytm, indicating a clear path towards sustained profitability. It bolsters investor confidence in the Indian fintech sector and highlights the effectiveness of cost management and AI integration strategies. Rating: 8/10

Difficult Terms Explained: * Profit After Tax (PAT): The net profit a company earns after deducting all expenses, taxes, and interest payments. * EBITDA: Earnings Before Interest, Taxes, Depreciation, and Amortization. It is a measure of a company's operating performance before accounting for non-operating expenses and non-cash charges. * Impairment of loan: A reduction in the recorded value of a loan asset when it is determined that the borrower may not repay the full amount. * Joint Venture (JV): A business arrangement where two or more parties agree to pool their resources for the purpose of accomplishing a specific task or project. * YoY: Year-on-year, a comparison of a metric from the current period to the same period in the previous year. * ESOPs: Employee Stock Ownership Plans, a benefit plan that gives employees ownership interest in the company. * QR Code: Quick Response code, a two-dimensional barcode that can be scanned by smartphones to access information or perform actions.