Paytm parent One 97 Communications reported profit after tax of INR 225 crore (INR 2.25 billion) for the quarter ended September, more than ten times the INR 21 crore it earned a year earlier, as revenue rose 28% to INR 2,648 crore and EBITDA reached a record INR 270 crore.

The result, released Oct. 26, gives India's best-known listed fintech a double-digit EBITDA margin for the first time, at 10%. For investors in Asia's payment and lending platforms, it is a test case of whether a company that earns almost nothing on India's free UPI transfers can still make money by selling devices, loans and investment products to the merchants and consumers that payments bring in.

The headline jump flatters the trend. The year-earlier quarter carried an exceptional charge of about INR 190 crore tied to a joint-venture loan, according to Goodreturns, which put growth at about 30% after adjusting for it. Profit was also only slightly higher than the INR 220 crore Paytm earned in the June quarter, Inc42 reported.

Lending distribution drives growth

Revenue from distributing financial services rose 49% to INR 912 crore, the fastest-growing line, the company said. Paytm arranges merchant loans, personal loans and its Postpaid credit line for partner lenders, which underwrite and hold the loans. Repeat borrowers accounted for more than half of merchant loan disbursements in the quarter, and the number of key financial services customers rose 35% to 880,000.

Founder and Chief Executive Vijay Shekhar Sharma summed up the model on the Oct. 27 earnings call: “We acquire using payment, credit is what earns our money.” He said Paytm wants to remain a distribution and technology company, not a balance-sheet lender. President and Group Chief Financial Officer Madhur Deora said the company works with more than a dozen lending partners.

On the payments side, merchant gross merchandise value rose 26% to INR 7.1 lakh crore. Merchants paying for subscriptions, mostly for the Soundbox speaker that announces incoming payments, reached 16.4 million, up 2.7 million in a year. Net payment revenue was INR 644 crore, up 21% once a government incentive from a year ago is stripped out.

That incentive, from the Payments Infrastructure Development Fund, ended in December 2025. Excluding it, Paytm said operating revenue grew 33% and EBITDA nearly quadrupled, with the margin climbing from 3% to 10%.

Monthly transacting users rose by 10 million to 85 million, the largest annual gain in about three years, the company said. Its consumer UPI transaction value grew 42%, against 19% for the industry. Sharma told analysts the goal is a one-third share of the consumer payments market.

UPI fee would come on top

The figure investors are watching is the proposed merchant discount rate on UPI payments. Paytm estimates that, at the proposed cap and its current mix of business, the fee would lift its payment processing margin by about 2.5 basis points, from a level it describes as comfortably above 4 basis points.

Deora put the arithmetic on the call: at roughly INR 28 lakh crore of annual GMV, the uplift would be worth slightly more than INR 700 crore. The company said the benefit could take two to three quarters after implementation to settle, and that its plans do not assume the fee. The Free Press Journal reported that implementation is expected after Diwali.

Costs are growing more slowly than sales. Indirect expenses rose 14%, falling to 46% of revenue from 52% a year earlier, which Paytm credits largely to artificial intelligence tools it builds in-house for sales, service, risk and software development. Spending on software, cloud and data centers rose 59% to INR 211 crore, according to Inc42. Deora said indirect costs should grow at less than half the rate of contribution profit over the next three to four quarters.

Paytm ended September with INR 13,617 crore of cash. Its board approved investing up to an additional INR 500 crore in subsidiary Paytm Cloud Technologies over 12 months, Inc42 reported.

Shares slip after a strong run

The stock gave back early gains the next day. One 97 fell 1.3% to INR 1,633 on Oct. 27 after rising 2.4% on Oct. 26 ahead of the announcement, the Free Press Journal reported, leaving it up about 26.5% this year and the company valued at about INR 1.05 lakh crore. Indian equities have faced steady selling by foreign investors, who pulled INR 348 billion in October.

Jefferies reiterated its buy rating with a target price of INR 2,150, Goodreturns reported. The outlet also noted a 19% quarter-on-quarter increase in Paytm's sales staff as the company spends more on adding merchants.

The next test comes quickly. Diwali fell late this year, so almost the entire festive season lands in the December quarter, the company said, and the timing of the UPI merchant fee will decide how much of the promised margin shows up in results for the rest of fiscal 2027.