Shares of One97 Communications Ltd., the parent of Paytm, are under pressure on Tuesday, despite delivering a stronger-than-expected June-quarter performance. This is after its board decided not to proceed with the proposed bonus share issue at this time, opting instead to prioritise long-term growth and profitability.
The decision was taken at the company's board meeting held on July 20, where directors also approved the unaudited standalone and consolidated financial results for the quarter ended June 30, 2026. The company said the board evaluated the bonus issue proposal from the perspective of long-term shareholder value creation.
Paytm shares fell over 2% to Rs 1,320.40 apiece.
Paytm reported a consolidated net profit of Rs 220 crore for the June quarter, ahead of Bloomberg's estimate of Rs 188 crore. Revenue rose to Rs 2,448 crore, beating the consensus estimate of Rs 2,375 crore, while EBITDA came in at Rs 203 crore, well above the expected Rs 178 crore. EBITDA margin stood at 8%, compared with Street expectations of 7.88%.
Sequentially, net profit increased 20% from Rs 184 crore, revenue rose 8% from Rs 2,264 crore, while EBITDA surged 54% from Rs 132 crore, lifting the margin to 8% from 6% in the previous quarter. The company also reported its highest-ever quarterly EBITDA, driven by faster merchant GMV growth and strong momentum in its payments and financial services businesses.
Paytm Q1 Results - Cons, QoQ
- Net profit up 20% at Rs 220 crore vs Rs 184 crore
- Revenue up 8% at Rs 2,448 crore vs Rs 2,264 crore
- EBITDA up 54% at Rs 203 crore vs Rs 132 crore
- EBITDA margin at 8% vs 6%
Following the earnings, Goldman Sachs maintained its 'Buy' rating and raised its target price to Rs 1,500 from Rs 1,430. The brokerage said the strong quarter warranted earnings upgrades, with growth being driven by market share gains across both offline and online payments.
Citi also reiterated its 'Buy' rating and increased its target price to Rs 1,560 from Rs 1,425. The brokerage said EBITDA momentum was supported by robust financial services growth and lower cloud infrastructure costs.
CLSA maintained its 'Underperform' rating on Paytm while raising its target price to Rs 1,050 from Rs 1,000. The brokerage said gross merchandise value (GMV) growth is accelerating, albeit at a slightly lower take rate, while financial services revenue growth remains strong and contribution margins are steady.
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