Paytm's 20% Margin Target, Focus On Cost Discipline And More: Five Key Takeaways From Management Concall
Paytm management expects Ebitda margins to improve significantly by the end of financial year 2026.
Paytm’s parent One 97 Communication, in its post earnings concall on Tuesday, offered a focused roadmap on profitability, payments growth, and credit revival, with clear targets set by founder and CEO Vijay Shekhar Sharma and President and Group CFO Madhur Deora.
The management commentary also underlined financial discipline, product-led growth, and AI adoption as core themes. Here are the top five takeaways:
Striving Towards 15–20% Ebitda Margins
Paytm is working towards achieving 15–20% Ebitda margins in the next few years, with the contribution margin already trending in the high 50s. Deora noted this level is the “right number” for the business. Contribution margin growth is expected to support future Ebitda improvement.
From the next quarter, the company will discontinue adjusted Ebitda and ESOP line disclosures, signalling a move towards more standardised reporting.
FY26 Exit Margins To Be Significantly Better
The management expects Ebitda margins to improve significantly by the end of financial year 2026. While no specific guidance was given for interim quarters, both Sharma and Deora expressed confidence in operational leverage and disciplined cost management delivering long-term profitability.
Payments Business Profitable Even Without MDR
The management stated that payments is a profitable standalone business, even in the absence of MDR on UPI. The company is focussed on leveraging its growing merchant base, credit card and EMI offerings, and POS network (now at around 1 million devices) to drive margins.
Sharma added that Paytm’s model is not reliant on future MDR implementation, and payments in India still has 4–5 times growth potential.
Cost Discipline At The Forefront
Indirect expenses are being tightly controlled and are not expected to grow “anywhere close” to revenue. While several cost-saving measures have already been implemented, there are further opportunities to optimise.
Marketing spend fell 65% year-on-year, ESOP costs dropped 88%, and non-sales employee costs declined 28%. This fiscal discipline is expected to drive structural margin expansion.
Consumer Credit Recovery In Sight
The consumer credit business appears to have bottomed out, with expectations of a recovery in personal loans and BNPL products. While Default Loss Guarantee had a limited impact, merchant loan growth was identified as a “needle mover”. Collection costs have come down, and current disbursals stand at 30–40% of lending partners’ available amounts.
Paytm’s management touched upon several operational and strategic updates. Gross Merchandise Value growth was attributed to increased UPI adoption and the onboarding of new merchants, with a strong focus on further “farming” of the existing merchant base.
The company highlighted a large untapped opportunity in the cards business, particularly through deeper penetration of card machines. Every internal process and customer-facing product is being redesigned with an AI-first approach to drive efficiency and scale.
Management also confirmed that the recent discontinuation of BNPL was due to its unsecured nature, and indicated a possible return of personal credit and BNPL offerings once market conditions improve.
