Shares of One97 Communications, the parent organization behind popular payments platform Paytm, surged nearly 7% on Wednesday, May 7, after the company unveiled its fourth-quarter earnings. The fintech giant announced a significant reduction in its consolidated loss, reporting a figure of ₹545 crore for the quarter ending March 31, 2025. This improvement can be largely attributed to lowered payment processing fees and employee benefits adjustments.

Financial Overview: Losses and Revenues

During this reporting period, One97 Communications faced a notional loss of ₹522 crore. This figure primarily stemmed from an accelerated expense related to the employee stock ownership plan (ESOP), which accounted for ₹492 crore, alongside ₹30 crore in impairments. Notably, Paytm’s CEO, Vijay Shekhar Sharma, voluntarily returned 2.1 crore shares he had received under the ESOP initiative.

• Excluding the one-time loss, the company’s operational loss stood at ₹23 crore for the quarter.
• Revenue from operations saw a decline of 15.7%, dropping to ₹1,911.5 crore from ₹2,267.1 crore reported in the same quarter the previous year.

Despite these challenges, Paytm’s operating revenue of ₹1,911 crore benefited from a boost in financial services distribution and ₹70 crore in UPI incentives during the fiscal year.

Growth Indicators: GMV and Market Performance

In a positive turn, the gross merchandise value (GMV) from the Paytm platform exhibited a 19% increase, reaching ₹5.1 lakh crore in the March 2025 quarter, up from ₹4.3 lakh crore the previous year. This suggests a solid recovery in user engagement and transactions on the platform, showcasing resilience in the competitive fintech landscape.

Analyst Insights and Future Projections

Brokerage firm Motilal Oswal Financial Services highlighted a year of improved business metrics for Paytm throughout FY25. They noted that lending performance in merchant loans has significantly contributed to a recovery in disbursements. The brokerage maintained its contribution profit estimates and projected that Paytm could achieve EBITDA positivity by FY27, valuing the company at ₹870, based on an 18x FY30E EBITDA multiple discounted to FY26E, which aligns with 5.2x FY26E sales.

In contrast, JM Financial has raised its target price for Paytm to ₹1,070, up from ₹1,000, while reiterating a ‘Buy’ recommendation. They believe that with past challenges addressed and adjusted EBITDA profitability achieved, the company is poised for sustained growth.

• The decline in ESOP expenses is expected to substantially boost PAT profitability.
• The brokerage anticipates that Paytm will benefit from network effects typical of platform businesses, which should enhance margins significantly.

As Paytm continues to navigate its financial landscape, the company appears to be on a path toward recovery and growth, with analysts keeping a close eye on its performance and market strategies in the coming quarters.

For investors and stakeholders, the focus on profitability and operational efficiency will be crucial as Paytm aims to solidify its position in the evolving fintech sector.