Paytm Slips 1% at the Open Even as Citi, Jefferies and Bernstein Lift the Bull Case After Record Q2 Margin

Paytm's parent One 97 Communications started Tuesday's session slightly in the red, even though nearly every major brokerage covering the stock turned more positive after its September-quarter results. The shares were trading at about Rs 1,636 at 9:32 am, down roughly 1.1% from Monday's close of Rs 1,654.70. The stock had gained 2.4% on Monday ahead of the results, so part of Tuesday's dip looks like traders taking profits after buying the news in advance.

What the quarter showed

Revenue from operations rose 28% from a year earlier to Rs 2,648 crore. EBITDA, a measure of operating profit before interest, tax and depreciation, nearly doubled to a record of about Rs 270 crore. That took the EBITDA margin to around 10%, the first time Paytm has reached double digits, up from about 6.8% a year ago.

Reported net profit came in at around Rs 225 crore, compared with Rs 21 crore a year earlier. That more-than-tenfold jump makes for a striking headline but needs context. A year ago, Paytm booked a one-time loss of about Rs 190 crore. This quarter, exceptional items were only about Rs 4 crore. Before those items, profit was roughly Rs 229 crore, up about 9%. Compared with the June quarter, net profit rose only about 3%. In other words, the business is improving steadily, not exploding.

Growth was led by financial services, mainly loan distribution, where revenue rose about 49% from a year earlier according to Bernstein. Marketing services revenue grew about 26%. Net payment revenue, what Paytm keeps from processing transactions after costs, rose 8% from a year earlier.

Why brokerages are still buying

The bull case rests heavily on one policy change: a merchant discount rate, or MDR, on UPI payments. After years of UPI being free for merchants, a fee has now been announced and is due to start after Diwali. Paytm told analysts it expects this to lift its overall payment processing margin by about 2.5 basis points, with the full effect showing up within two to three quarters.

Goldman Sachs estimates the UPI fee could raise Paytm's EBITDA by as much as 40% and believes the market has not fully priced that in. It kept a buy rating, though it trimmed its target to Rs 2,010 from Rs 2,070. Bernstein has the highest target at Rs 2,200, about 33% above Monday's close. Jefferies kept a buy call with a Rs 2,150 target and said pre-tax profit beat its estimate by about 17%, though higher taxes left after-tax profit in line. Citi raised its target to Rs 1,940 from Rs 1,560.

The risks investors are weighing

The UPI fee is not yet a sure thing in Paytm's numbers. The rollout has already slipped once, and earlier this month the stock hit a 10% lower circuit when reports suggested a delay. Until the framework is final and payments start flowing, a big part of the upside is a forecast.

Costs are also climbing. Indirect expenses rose about 14%, as Paytm spends more on artificial intelligence, marketing and sales staff to win merchants and users. Analysts also flagged default loss guarantee costs in the lending business, where Paytm covers part of the losses on loans it helps arrange, as a variable to watch in coming quarters.

The valuation already reflects much of this optimism. With a market value of about Rs 1.06 lakh crore and a 28% gain so far in 2026, at a time when the Nifty 50 is down about 13% this year, Paytm has been one of the market's clear winners. Tuesday's flat-to-lower start suggests investors want to see the UPI fee show up in the next quarter's results before pushing the stock much higher.

This is an original summary based on public reporting. See our editorial policy for how we source, write, and correct our stories.