Paytm returns to 2.94% operating margin, but shares fall 5.97%
Revenue growth outpaced expense growth, but other income still supplied 73.68% of pre-tax profit and the stock's next-session decline exceeded its usual move.
Filed 20 Jul 2026, 22:04 IST · after market close · One 97 Communications Ltd (PAYTM)
Key takeaways
- Consolidated operating margin rebounded 2.46 percentage points QoQ to 8.29% as revenue grew 8.13% while expenses rose 5.30%.
- Revenue grew 27.67% YoY and operating profit rose 183.92%, as expenses increased more slowly at 21.61%.
- Other income contributed 73.68% of profit before tax, so the Rs 220 cr net profit had a substantial non-operating contribution.
Price around the results
Margin recovery resumes after the Q4FY26 pullback
Consolidated revenue growth outpaced expense growth in both comparisons, lifting operating profit faster than revenue. Operating margin recovered to 8.29% from 5.83% in Q4FY26, after rising from 3.73% in Q1FY26 through 7.11% in Q3FY26 before the Q4 decline. This quarter therefore marks a renewed improvement rather than a continuation of the previous quarter's margin contraction.
Higher tax and interest offset part of the operating gain
The tax rate rose 5.26 percentage points QoQ and 7.77 percentage points YoY to 10.93%, limiting the conversion of the 27.32% QoQ increase in pre-tax profit into net profit growth. Interest expense also increased 40.00% QoQ and 75.00% YoY, while depreciation fell 0.76% QoQ and 21.13% YoY. Other income declined 8.54% QoQ and 19.15% YoY, but still accounted for 73.68% of pre-tax profit.
Paytm remains near the bottom of reported financial-services margins
Among 53 financial-services peers that have reported, Paytm's 8.29% operating margin was 56.14 percentage points below the 64.43% sector median and ranked second from the bottom. The stock fell 3.49% on the first session after the results and was down 5.97% on the next session, with first-day volume at 3.24 times its usual level. The initial decline was smaller than the 4.93% median absolute move after the company's last eight results, making it within its usual range at first despite the larger second-day fall.
Q1FY27 at a glance
Consolidated figures as filed with NSE — cross-checked against an independent source.
| Line item | Q1FY27 | Q4FY26 | QoQ | YoY |
|---|---|---|---|---|
| Revenue | ₹2,448 cr | ₹2,264 cr | +8.13% | +27.67% |
| Other income | ₹182 cr | ₹199 cr | -8.54% | -19.15% |
| Expenses | ₹2,245 cr | ₹2,132 cr | +5.30% | +21.61% |
| Operating profit | ₹203 cr | ₹132 cr | +53.79% | +183.92% |
| Operating margin (%) | 8.29% | 5.83% | — | — |
| Interest | ₹7 cr | ₹5 cr | +40.00% | +75.00% |
| Depreciation | ₹131 cr | ₹132 cr | -0.76% | -21.13% |
| Profit before tax | ₹247 cr | ₹194 cr | +27.32% | +95.26% |
| Tax | ₹27 cr | ₹11 cr | +145.45% | +575.00% |
| Net profit | ₹220 cr | ₹183 cr | +20.22% | +79.59% |
| EPS (₹) | ₹3.44 | ₹2.87 | +19.86% | +79.17% |
Operating margin of 8.29% compares with a Financial Services sector median of 64.43% across 53 peers that have reported Q1FY27.
How the stock reacted
| Window | Stock | vs NIFTY |
|---|---|---|
| Results day | -3.49% | -3.28% |
| Next session | -5.97% | — |
| 5 sessions | -2.94% | -1.89% |
Volume on the results session was 3.24× its 20-day average.
What to watch
- Whether operating margin holds above 8.29% after the QoQ recovery.
- Whether other income's contribution to pre-tax profit moves below 73.68%.
- Whether the tax rate remains near 10.93% after its 5.26-percentage-point QoQ increase.