Paytm shares slip despite strong Q1, seeks wallet licence to rebuild payments business
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Shares of One97 Communications Ltd (Paytm) fell nearly 1% in early trade on Tuesday despite the fintech major reporting a robust performance for the June quarter and announcing plans to revive its digital wallet business through a fresh regulatory application.
The stock declined 0.92% to ₹1,335.10 in early trade after closing at ₹1,347.50 on Monday, ahead of its earnings announcement. Despite Tuesday's decline, Paytm shares have gained 4.4% so far in 2026, outperforming the Nifty 50, which has fallen 7.3% during the same period.
The company on Monday reported a 79% year-on-year jump in consolidated net profit to ₹220 crore for the quarter ended June 30, while revenue from operations rose 28% to ₹2,448 crore. Merchant gross merchandise value (GMV) increased 31% to ₹7.1 lakh crore, while customer UPI gross transaction value (GTV) climbed 45% to ₹5.9 lakh crore. Monthly transacting users reached 8 crore and merchants subscribed to its payment devices rose to 1.57 crore.
Brokerage Citi retained its "Buy" rating on the stock and increased its target price ₹1,560 from earlier levels, implying an upside of nearly 16% from Monday's closing price. It said Paytm's EBITDA of ₹200 crore exceeded its estimates by 16%, supported by lower cloud infrastructure costs and stronger merchant loan distribution, although payment margins remained under pressure due to higher device rental expenses.
However, brokerage CLSA maintained an "Underperform" rating, saying the recent rally in the stock has already factored in much of the positive outlook.
Separately, Paytm said its wholly owned subsidiary, Paytm Payments Services Ltd (PPSL), has applied to the Reserve Bank of India (RBI) for a Prepaid Payment Instrument (PPI) licence, marking its first formal step towards reviving its wallet business after the central bank cancelled the Paytm Payments Bank licence.
The company disclosed the development in its June quarter investor presentation, saying a wallet would complement its existing consumer payments offerings.
"Our wholly owned subsidiary, Paytm Payments Services Limited (PPSL), has applied for a wallet licence. We believe that consumers benefit from a range of payment options and wallet will add to the completeness of our consumer offerings," the company said.
A PPI licence allows authorised entities to issue and operate digital wallets, enabling users to store money, make merchant payments, pay bills and undertake UPI-linked transactions within regulatory limits. If approved, the licence would allow Paytm to offer wallet services directly through PPSL instead of relying on partner banks.