While it has been a challenging past year for One 97 Communications Ltd, the parent company of Paytm, following the Reserve Bank of India (RBI) restrictions on Paytm Payments Bank, the fintech company is expected to witness significant improvements in its growth trajectory, with a more optimistic outlook ahead. Ishan Tanna, Equity Research Analyst at Ashika Institutional Equity, said, “The company is on track to achieve EBITDA breakeven by Q4FY25 and sustain profitability throughout FY26. While seasonal factors and wage hikes may lead to minor losses in certain quarters—particularly during phases of accelerated consumer onboarding—Paytm remains well-positioned for robust revenue growth.”
A little back in time
The RBI, on January 31, 2024, had directed Paytm Payments Bank (PPBL), the banking arm of Paytm, to cease its operations by 29th February 2024. The central bank had barred PPBL from accepting deposits or top-ups in any of its key products — customer accounts, prepaid instruments, wallets, FASTags and National Common Mobility Card (NCMC) among others — after February 29 in the wake of “persistent non-compliances and material supervisory concerns”. On February 8, 2024, RBI Deputy Governor Swaminathan J maintained that the regulatory actions were taken after giving the firm sufficient time to comply.
While the payment major’s management had been assuring its stakeholders of its roadmap towards smooth transition and business continuity, the slew of resignations from PPBL’s board just days after the RBI embargo on its banking operations signalled a governance failure in PPBL. Later, a group-level advisory committee was also formed, with a focus on strengthening governance rather than addressing or correcting the lapses that contributed to the PPBL crisis.
The impact of this was severe. Per a report by Indian Express, it led to Rs 765 crore loss in operating revenue, Rs 533 crore was wiped from its contribution profit, Rs 648 crore dent in EBITDA (excluding ESOP costs) in Q1FY25. Also, One 97 Communications’ share price tumbled 55 per cent between January 25 and February 16, 2024.
Non-compliance not new to Paytm
Non-compliance is not new to Paytm and the company has come under RBI’s radar for the first time. Here are other such instances when the payments major was under scanner from regulatory firms:
– PPBL faced regulatory issues in the initial days of operation. The first issue was due to violations of licensing conditions which included breaches of day-end balances and non-compliance with KYC guidelines. Due to this, the RBI had asked PPBL to temporarily halt the opening of a new account in June 2018, which was later lifted in December 2018 after they submitted compliance reports.
– In October 2021, PPBL was fined Rs 1 crore after the RBI found that the firm had submitted false information to the central bank.
– Again in March 2022, RBI directed the Payments Bank to stop onboarding new customers with immediate effect and to appoint an external audit firm to conduct a comprehensive system audit. The RBI had to intervene after identifying shortcomings in cybersecurity, technology, and KYC/anti-money laundering compliance in 2021. It also discovered that both One 97 Communication entities and the bank were sharing the same servers, which is prohibited under RBI regulations.
– RBI had found that there was no serious action taken by the payments firm to take corrective action. As a result, in October 2023, the central bank imposed a monetary penalty of Rs 5.39 crore for non-compliance with KYC norms.
– The most recent now is the sweeping curbs on Paytm’s payments bank business by the central bank, which included restrictions on accepting new deposits and carrying out credit transactions after February 29.
A turnaround?
After going through all the turbulence for almost a year, Paytm Founder and Chief Executive Officer Vijay Shekhar Sharma, per a Bloomberg report in January this year, had put hopes on the revival of the company. “As far as the bank is concerned, which is a separate entity, now we are pretty much at an arm’s length so it should get sorted out soon. We’ve learnt our lessons and we’ve dramatically changed our approach towards the business,” Sharma had told Bloomberg News at the World Economic Forum 2025.
He also hoped to swing Paytm back to operational profitability excluding the cost of employee stock ownership plan in the next quarter. Sharma holds a 51 per cent stake in the bank and the rest of the stake is held by One97 Communications Ltd.
While a full revival is challenging, it’s definitely not out of reach. Earlier in January, One 97 Communications Ltd, had reported its fiscal third quarter earnings wherein it had narrowed its loss to Rs 208.50 crore, down from a loss of Rs 221.70 crore recorded during the same period of previous financial year. The company had turned black in the second quarter of FY25 with profit for the period at Rs 928.30 crore due to one-time exceptional gain of Rs 1,345 crore, on account of sale of entertainment ticketing business. For Q3FY25, Paytm had posted revenue from operations at Rs 1827.80 crore, down 35.88 per cent YoY.
Expectations from Q4 numbers
Today (May 6), Paytm will release its fiscal fourth quarter earnings report. Ishan Tanna from Ashika Institutional Equity, told FE, “Paytm is expected to witness significant improvements in its growth trajectory, with a more optimistic outlook ahead. A key driver of this optimism is its ability to onboard UPI users efficiently while maintaining cost discipline. In Q4FY25, Paytm is projected to generate approximately Rs 2,250 crore in revenue, with an EBITDA of around Rs 95 crore. The company’s next phase of growth will be fueled by higher revenues, supported by a revival in the financial services segment. Notably, around 80 per cent of loans disbursed via the Paytm platform are now backed by FLDG, reflecting strengthened lending capabilities.”
Additionally, Paytm is continuously working on prioritising cost optimization, efficiency improvements, and bottom-line performance. Going forward in FY26, Ishan Tanna said, a significant reduction in ESOP costs will further support profitability. However, potential risks remain, including regulatory challenges, a slowdown in merchant additions, and slower growth in lending products, which could impact the company’s trajectory.
YES Securities, meanwhile, added, “We assume 6 per cent QoQ growth in payments services revenue and 30 per cent QoQ growth in financial services and others and arrive at an overall growth in revenue from operations of 20 per cent QoQ, after factoring in UPI incentive. We forecast Payment Processing Charges (PPC) as a proportion of payments revenue to be at 51.0 per cent, a metric that was 56.9 per cent in Q3FY25, lower QoQ largely due to UPI incentive in Q4FY25.”