Shares of One 97 Communications, the parent of Paytm, fell nearly 5% in intraday trade on Friday, tracking weakness in the broader market, despite the fintech firm reporting a strong set of earnings for the December quarter.

Extending losses for a second straight session, Paytm shares slipped as much as 4.8% to ₹1,112.55 on the BSE, dragging its market capitalisation down to ₹72,190 crore. Trading volumes remained muted, with 1.83 lakh shares changing hands, compared with the two-week average of 2.21 lakh shares.

The decline came amid broader market weakness, with the Sensex and Nifty down around 0.4% each, as investors turned cautious ahead of the Union Budget 2026, to be presented by Finance Minister Nirmala Sitharaman on February 1.

Earlier in the day, Paytm shares opened marginally higher at ₹1,169.90, after ending 0.76% lower at ₹1,168.70 in the previous session. The stock has fallen nearly 13% so far in calendar year 2026 amid profit booking, after hitting a 52-week high of ₹1,381.75 on December 2, 2025. The counter had touched a 52-week low of ₹652.30 on March 11, 2025. Over the past year, the stock has gained 46% and is up more than 5% in the last six months.

Q3 performance in line with estimates

One 97 Communications reported a strong operational performance in Q3 FY26, posting a net profit of ₹225 crore compared with a net loss of ₹208 crore in the year-ago quarter. Total revenue rose 6% quarter-on-quarter and 20% year-on-year to ₹2,190 crore, driven by healthy growth across payments and financial services.

Revenue from payment and financial services increased 24% year-on-year and 6% quarter-on-quarter to ₹1,860 crore, with financial services revenue rising 34% year-on-year and 10% sequentially to ₹670 crore. Marketing services revenue, including commerce and cloud offerings, grew 4% quarter-on-quarter to ₹240 crore.

Gross merchandise value (GMV) grew 23% year-on-year and 9% quarter-on-quarter to ₹6.2 lakh crore, supported by growth in subscription merchants, higher payment volumes and expanding financial services distribution. Registered merchants rose 12% year-on-year, while payment devices increased 23% year-on-year.

Payment processing charges climbed 18% year-on-year to ₹670 crore, while net payment margin rose 25% year-on-year to ₹610 crore. Contribution profit increased 30% year-on-year to ₹1,250 crore, though contribution margin moderated to 56.9% due to higher direct expenses. EBITDA rose 10% quarter-on-quarter to ₹156 crore.

Brokerages on Paytm

Brokerages offered mixed views on the stock. JM Financial said Paytm continued to beat expectations, with adjusted PAT at ₹230 crore and contribution margins holding firm at 57%, aided by better payment processing margins and cost efficiencies.

Motilal Oswal described the quarter as healthy and broadly in line with estimates, citing strong GMV growth and improving operating leverage, while flagging the future of the PIDF scheme as a key near-term monitorable.

Global brokerage Citi reiterated a ‘Buy’ rating but cut its target price to ₹1,375 from ₹1,500, citing potential near-term EBITDA pressure from the possible withdrawal of PIDF incentives. CLSA maintained an ‘Underperform’ rating with a ₹1,000 target, while Jefferies retained a ‘Buy’ call with a target of ₹1,450, noting Q3 results were marginally ahead of expectations.

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