One97 Communications Ltd. (the parent company of Paytm) was under pressure yesterday on the heels of the fintech company posting a better-than-expected performance for the second quarter.
The decision was made at the company’s board meeting on July 20, where directors also approved the unaudited standalone and consolidated financial results for the quarter ended June 30, 2026.
Paytm said the board had looked at the proposed bonus issue from its perspective of creating shareholder value in the long run. They decided that the company’s strategic priorities should be maximized, and they wanted to keep a long-term growth and profitability strategy in mind as opposed to making a quick decision on the bonus issue.
The decision was made even when Paytm’s performance was strong in the second quarter and Paytm posted strong quarterly results. The company posted an overall net profit of Rs 220 crore on a consolidated level, beating Bloomberg’s estimate of Rs 188 crore.
Revenue rose to Rs 2,448 crore from the consensus of Rs 2,375 crore. EBITDA was also at Rs 203 crore, better than the expected Rs 178 crore. The company’s EBITDA margin came in at 8%, compared to Street expectations of 7.88%.
On a sequential basis, Paytm’s performance significantly improved. Net profit rose 20% from Rs 184 crore in the last quarter, while revenue increased 8% from Rs 2,264 crore. EBITDA grew 54% from Rs 132 crore, pushing the margin higher from 6% to 8%.
The company said it posted its highest-ever quarterly EBITDA, helped by faster growth in merchant gross merchandise value and strong momentum and growth in payments and financial services business.
Brokerages mostly remained positive after the earnings announcement. Goldman Sachs maintained its ‘Buy’ rating and its target price was raised to Rs 1,500 from Rs 1,430. The strong quarterly performance might lead to upward earnings estimates being revised, backed by market share growth in online and offline payments, it said.
Citi also kept its ‘Buy’ rating and increased its target price to Rs 1,560 from Rs 1,425. EBITDA momentum was supported by strong growth in financial services and lower cloud infrastructure costs.
But CLSA maintained its ‘Underperform’ rating but raised its target price to Rs 1,050 from Rs 1,000. Paytm’s GMV growth was also accelerating, but at a slightly lower take rate, the broker said. It also noted that financial services’ revenue and contribution margins were holding up well and it continued to see further growth in financial services revenues and contribution margins.
The different market responses underscore investors’ focus on Paytm’s capital allocation. Even if Paytm’s performance did exceed expectations, the decision to defer the bonus issue seems to have affected sentiment.
Investors will now closely monitor Paytm’s ability to sustain the growth momentum and expand the payments market share and profitability. The financial services business, merchant growth, and cost efficiency will be key factors in the stock’s performance in the following quarters.
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