Two years after a regulatory crisis threatened its business, Paytm has reported a sixth straight profitable quarter. Revenue grew 28% and margins improved, mainly because of strong growth in loan distribution.
One 97 Communications, which runs Paytm, reported net profit of ₹225 crore for the September quarter, compared with ₹21 crore a year earlier. The headline jump is somewhat misleading, because last year’s quarter included a large exceptional loss of ₹190 crore. Excluding one-time items, profit rose 9% to ₹229 crore. Profit was also only slightly higher than the ₹220 crore in the June quarter.
The operating business improved more convincingly. Operating revenue rose 28% to ₹2,648 crore, and 8% from the previous quarter. On a comparable basis, revenue grew 33%. EBITDA was ₹270 crore, almost four times the year-earlier level, and the EBITDA margin widened from 3% to 10%.
Lending distribution leads
The fastest-growing business is financial services distribution, where Paytm connects customers and merchants with lenders and other financial providers and earns a fee, without taking credit risk itself. Revenue from this segment rose 49% to ₹912 crore, driven by merchant loans, personal loans, Paytm Postpaid, margin trade funding and Paytm Gold.
This is now central to Paytm’s strategy. Payments bring in large numbers of users and merchants, but earn thin margins. Distributing loans and financial products to those users earns much more. As this segment grows, Paytm’s overall margins rise.
Payments are still the largest business. Payment services revenue rose 25% to ₹1,434 crore, and net payment revenue, after processing costs, grew 21% on a comparable basis to ₹644 crore. Marketing services revenue rose 26% to ₹287 crore.
From crisis to profit
The results matter because of where Paytm started. In early 2024, the RBI’s restrictions on Paytm Payments Bank cut off important parts of its business and led to large losses, job cuts and a collapse in the share price. Since then, Paytm has received payment licences for its separate payments subsidiary, cut costs sharply and shifted towards higher-margin financial services. Six profitable quarters in a row show the recovery is real.
Management also cited greater use of AI to automate operations and lower costs, which has contributed to the margin improvement.
The risks
Two risks stand out. First, much of the growth depends on lending through partners. If borrowers start defaulting more as interest rates and fuel costs rise, lenders may pull back, and Paytm’s distribution revenue would fall with them. Second, regulation remains a constant factor in Indian fintech. The RBI has repeatedly tightened rules on digital lending and default-loss guarantees, and further changes could affect Paytm’s model.
Paytm also earned ₹182 crore in other income, mainly from investing its large cash reserves, which supported reported profit.
For investors, the key question is whether Paytm can keep expanding margins while growing revenue at 25–30%.
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