One 97 Q1 FY27 Results (NSE: PAYTM)
Signal: Margins at cyclical peak
The read
Paytm delivered its 4th straight quarter of OPM expansion (+1100bps YoY to 10.1%), with revenue hitting a 8-quarter high of ₹2,448 Cr (+27.7% YoY). Operating leverage is real: employee cost grew only 15.6% and depreciation fell 21.1% while revenue surged. However, PAT of ₹220 Cr is flattered by ₹182 Cr other income (74% of PBT) and a low ₹27 Cr tax charge; operating PBT (ex-other income) was just ₹65 Cr. The core payments business still runs on thin operating margins.
| Metric | Value | YoY | QoQ |
|---|---|---|---|
| Revenue | ₹2,448 Cr | 27.7% | 8.1% |
| EBIT | ₹247 Cr | 42.8% | |
| Net profit | ₹220 Cr | 78.9% | |
| EPS | ₹3.44 | 79.2% | |
| EBIT margin | 10.1% |
P&L walk
Revenue grew 27.7% YoY to ₹2,448 Cr, the highest in 8 quarters; OPM expanded 1100bps YoY to 10.1% (4th straight expansion), driven by employee cost growth (+15.6%) far below revenue growth, and lower depreciation (-21.1%). PAT of ₹220 Cr rose 78.9% YoY but included ₹182 Cr other income (74% of PBT); operating PBT excluding other income was just ₹65 Cr.
Key positives
- Revenue ₹2,448 Cr (+27.7% YoY) — highest in 8 quarters, accelerating from ~18% in preceding quarters.
- OPM expanded 1100bps YoY to 10.1% — 4th consecutive quarter of margin expansion: employee cost +15.6% vs revenue +27.7% (operating leverage), depreciation -21.1%.
- PAT ₹220 Cr (+78.9% YoY) — highest quarterly profit in the consolidated series since Q2FY25's ₹930 Cr (which included a one-off gain).
- Payments & financial services revenue growing at a healthy clip; software/cloud costs declining YoY (-5.4%) reflects tech efficiency.
Key concerns
- Other income of ₹182 Cr (74% of PBT) masks thin operating profit — operating PBT ex-other income only ₹65 Cr (2.7% of revenue).
- Effective tax rate of ~11% (₹27 Cr tax on ₹247 Cr PBT) is unusually low; normalisation would cut PAT by ~₹40 Cr.
- Payment processing charges grew faster than revenue (+36.7% vs +27.7% YoY) — could indicate mix shift to higher-cost payment modes or pricing pressure from partners.
- Marketing spend surged 69% YoY — necessary for growth but may pressure margins if not matched by revenue acceleration.
- Regulatory overhang remains: FEMA show-cause notice (~₹611 Cr potential) and PPBL licence cancellation (though no group exposure per management).
Research and educational content only. Not investment advice.